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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (6563)	6/12/2002 4:30:01 PM
From: Jibacoa	Respond to of 52153

Sorry, I was placing a message about SEPR on the wrong thread.<g> Bernard

To: Ian@SI who wrote (6563)	6/12/2002 7:27:34 PM
From: Doc Bones	Respond to of 52153

The Hedge-Fund Craze [WSJ] Interesting discussion of hedge funds touching on some of the points made here. I get the feeling that the big increase in hedge funds may be exaggerating down moves. When many people want to participate in the market, but be "insured" against losses, it can cause drops to ripple, much as "portfolio insurance" contributed to the 1987 crash. My "feeling" has never been stronger than now. But this late bulletin: the AMGN buyback and TYC OK for CIT IPO, seem to be lifting the whole market a bit afterhours, for a change. - Doc AHEAD OF THE TAPE By GREGORY ZUCKERMAN Staff Reporter of THE WALL STREET JOURNAL Will the hedge-fund craze end badly? The concern is obvious: Investors are pouring money into hedge funds just as they stampeded into Internet and telecom stocks two years ago. Pessimists worry this investment craze may have the same ugly outcome as the last one. Clearly, if the hedge-fund world cratered, it wouldn't be just the super-rich who would suffer. Brokerage firms and banks have been working on ways to broaden the investor pool, developing ways for the "just wealthy" to put their money in. The amount of money in such funds -- which use borrowed money to amplify returns in their investments -- has almost doubled, to $563 billion, from two years ago. Inexperienced managers are launching funds, while others are dealing with more money than ever before. And they're all using borrowed money to charge up their returns. That's what is setting off alarms. But for now, at least, the worries seems premature. Most hedge funds aren't using anywhere near the leverage they embraced just a few years ago. And many hedge-fund managers are beginning to reveal more about the true risks of their portfolios. In fact, hedge funds may be the best bet in a slumbering market. Unlike most mutual funds, hedge funds can make big bets against stocks, or even shift entirely into cash. And they can help diversify a typical stock and bond portfolio. Last year, the average hedge fund rose 4%, compared with a loss of 13% for the S&P 500 index. The performance will likely slip, with more hedge funds entering the market, but returns could continue to top stocks. The fear is that if hedge-fund managers, under pressure to beat the market and to justify the hefty fees they are charging, begin piling on the leverage and making bigger and riskier bets, it could jeopardize the market. A surge of recent cases of managers fabricating their returns to cover up lackluster returns may be the first sign of problems. The key will be whether the Securities and Exchange Commission can overcome industry objections and force hedge fund to reveal even more to investors. If that happens, the inevitable blowups that result from the hedge-fund craze won't be big enough to rock the overall market. Send questions or comments to tape@wsj.com. online.wsj.com