Hedge Fund Reader : Bayou puts the reputation of the industry at stake

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September 17, 2005

Bayou puts the reputation of the industry at stake

Another cautious outlook issued on one off incident of the scandal involving Mr. Samuel Israel III of Bayou Management LLC, Connecticut-based hedge fund, which guzzled investors money. Although the fund mentioned that it had $440 million on paper. But with Mr. Israel now absconding, the Connecticut State Attorney General seized at least $101 million which was linked to Bayou from its bank accounts in Wachovia Bank. However, experts state that this is a stray incident and should take precautions before making any investment in them. But the fact cannot be denied from that these funds shake up the management of the organizations the grease their operations to make them work at peak performance. But it cannot be ignored that these funds at times acquire unnecessary risks of using leverage i.e. adopting higher debt to equity ratios. Although one bad apple cannot be typecasted as the entire basket, hedge funds on the basis their ills of their adoption of techniques cannot be outcasted. However caution and alertness should be a prime principle of investing. AZCentral.com Reports:

Hedge funds also represent a financial equivalent of cutting-edge technology. They've attracted some of the top talent in the field, competing to bring out the next-generation creative product, in this case making the financial markets more efficient. While some hedge funds undoubtedly wreck companies by short-selling and other tactics, at least a few funds allow for a longer time horizon and the patience to build companies.

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September 17, 2005 in Gossip & Scandal, Regulation | Permalink