News That Moves: Nov. Hedge Fund Numbers, Huge Treas.Sales, & Fleckenstein

RCM Comment: While some of the biggest and best hedge funds saw "double digit losses" in November we at RCM posted our second consecutive gain, up 5.67% for the month. We offered to advise Citadel at the end of October, but the phone has yet to ring. Perhaps the investors in Citadel should give us a call.
Cold November for hedge funds - WSJ
WSJ reports November rain poured down on hedge-fund managers as market turmoil and increased demands from investors wanting their money back deepened problems for funds already facing their worst year on record. The largest hedge funds run by Toscafund Asset Management and Kingdon Capital were among many funds with heavy losses in November, according to investors. Satellite Asset Management, founded by former Soros Fund Management traders, saw double-digit losses during the month and is reportedly among a handful of funds that have tried to stem investors' redemptions.

RCM Comment: The key to this story is the $400 billion number. The WSJ's opinion that rates will not rise is wrong, like so much of their reporting.
Huge Treasury sales benefit from yields - WSJ
WSJ reports the U.S. government could sell more than $400 billion in Treasury notes and bills in the final weeks of the year to cover its soaring funding needs, and it looks like it will continue to get the money on the cheap. In normal times, digesting such a massive amount of supply in such a short period would send yields soaring, as investors usually demand higher returns to accommodate the flood of securities. But these are far from normal times. Not even such a staggering amount of paper is expected to curb the government-bond market's move toward lower yields. Last week, Treasury yields, which move inversely to prices, hit record lows as bleak data pointed to a deepening recession and persistently falling prices in the U.S. That helped the long end of the yield curve in particular, which suffers the most from rising prices, as these eat into bonds' fixed returns. These trends should remain in place in the final weeks of the year, when demand for Treasurys also tends to rise as investors tidy up their books ahead of year-end accounts closing.

RCM Comment: I find it is always important to note when a well respected manager dramatically changes his stance. You will notice that Fleckenstein's website is listed on this blog under the 'Favorite Links' section. We have become more bullish on the markets over the last week, so this story comes as a sort of confirmation.
Hedge fund manager Fleckenstein closing down Short Fund - DJ
DJ reports hedge fund manager Bill Fleckenstein writes in his Daily Rap column that he's closing down his Fleckenstein Capital fund because he no longer wants to run a short fund. Describing running a short-only fund as "stressful, nerve-wracking and generally not very much fun, he said he became a short seller in part because of the "bubble" he saw forming because of Alan Greenspan-era policies and because of widespread lack of respect for risk. "However, the recent carnage in the stock market, real estate market and the financial system (as well as the job losses) has washed away those excesses to a large degree and it has violently demonstrated the risks associated with investing," he wrote. He said that though he believes the stock market "still has unfinished business on the downside," he said 2009 will be the time "to prepare for a return to managing money in a more balanced fashion, with longs (and some shorts), as there are currently plenty of interesting ideas that appear to offer a margin of safety." Fleckenstein said he'll return to investing using a more balanced investing approach in a vehicle that will not be a hedge fund.