Hedge Fund Makes Single $2.5bn Winning Trade

The New York Post reports that Philip Falcone's Harbinger Capital has made a single winning bet of $2.5bn shorting Wachovia.

The New York-based hedge fund is said to have shorted 117 million Wachovia shares at $30 back in May. Harbinger closed out its position recently, when Wachovia was trading at $9-a-share. One unnamed investor told the newspaper: 'That was the largest short position I have ever seen on the street'.

Harbinger, however, has bucked the trend. The Wall Street Journal reports that September generally looks likely to have been the worst month for hedge funds in a decade, with the average fund falling between 5 - 10%. Bloomberg reports that Lee Ainslie's Maverick Capital lost 19.5% during the month, with Chris Hohn's Children's Investment Fund falling 15% and David Einhorn Greenlight Capital dropping 12%. The news agency quotes Brad Balter, managing partner of Balter Capital Management, who said: 'Funds have suffered from volatility that has quadrupled, and a lot of that is related to the short ban'. The newspaper also reports that Sellers Capital is to close down, after betting as much a half of its holdings on Contango Oil & Gas. Contango's shares have fallen 50% since late June.

Finally, The Sunday Telegraph reports that asset management firms, too, suffered in September. The newspaper says that the average British fund  fell 14.3% in just 30 days, with all 33 sectors classified by the Investment Management Association falling (9.2% on average). The worst-performing sector was Global Emerging markets, which fell 18.5% during the month.

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