Hedge Funds Slash Leverage Amid Market Carnage

Appaloosa’s David Tepper and Avenue’s Marc Lasry have issued warnings about funds using borrowed money to juice returns in the current environment.

Marc Lasry (Christopher Goodney/Bloomberg)

Marc Lasry

(Christopher Goodney/Bloomberg)

Hedge funds are sharply reducing investment positions made with borrowed money, according to a report from investment bank Morgan Stanley’s prime brokerage division.

Hedge funds engaged in “very large active de-grossing” over the past few days, according to the report. The bank added that the cuts in gross market exposure occurred in all regions.

Morgan

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