Just a few quarters after risk became a dirty word, there are growing signs investors again fear missing the train more than they fear the danger of another train wreck.
One such sign is a modest revival of commodity hedge funds. Yesterday, Bloomberg News reported a new fund called Flintlock Commodity Opportunity Partners LP, led by Tudor Investment's former commodity whiz Steve Mathews, is set to open in January, "as investor appetite for risk returns." Commodity hedge funds that "ran into a stone wall six months ago now are finding ...investors are opening the door a crack," fund recruiter George Stein told Bloomberg.
Other evidence lies the scene where the crisis began: high-risk debt. Buyout pioneer Henry Kravis, interviewed in Wednesday's Wall Street Journal, marveled at the extent to which spreads have narrowed for refinancing the leveraged loans his Kohlberg Kravis Roberts & Co. foisted on various marquee corporations in the course of taking them private. "People are now prepared to take more risk because they need to get return and can't get a money-market return," Kravis said. "So demand has just opened up and it's a global demand."
Last week at a networking event, I met a young man who trades sub-prime asset-backed securities for a major bank. He told me his clients - a wide range of institutional investors - since August are venturing far down the quality ladder to scrape for ever more yield. He'll offer a security that yields 11 percent and a client will come back with, "Can you get me something closer to 13 percent?"
Healthy animal spirits? Or an indication no one learned anything from the crisis? Stay tuned.
Ex-Tudor Fund Manager Mathews Said to Plan Commodity Hedge Fund [Bloomberg News]
Bruce Fador: New Fund Data Chief [FT]
Citigroup Cuts 175 Jobs in Credit Cards, Branches [Bloomberg News]
Charles Radcliffe Joins First Republic Securities Company [First Republic Bank, via BW]
M.R. Beal Hires Public Finance Veterans Cheryl Ishmael and Robin Ginsburg as Managing Director and Senior Vice President [M.R. Beal, via BW]
Natixis Global Associates International Expands Asian Presence -- Opens Subsidiary in Taiwan [Natixis, via BW]