Where are the Hedge Trimmers?

1 06 2010

According to Wikipedia Administration  is “a rescue mechanism for insolvent companies and allows them to carry on running their business. The process – an alternative to liquidation – is often known as going into administration.” By the way the head administrator “must act in the interests of all the creditors and attempt to rescue the company as a going concern”. Over the last month you have probably heard of football clubs falling into this situation.

According to Wikipedia a Hedge Fund seeks “to hedge some of the risks inherent in their investments using a variety of methods, most notably short selling and derivatives. However, the term “hedge fund” has also come to be applied to certain funds that do not hedge their investments, and in particular to funds using short selling and other “hedging” methods to increase rather than reduce risk, with the expectation of increasing the return on their investment.” According to Wikipedia we should beware the hedges because, “as  private, lightly regulated entities, hedge funds are not obliged to disclose their activities to third parties.” 

The phrases “administration” and “hedge fund” were linked yesterday. Crystal Palace are faced with liquidation (the stage after administration). In fact a Hedge Fund called Agilo  caused all the trouble, because of them Palace went into Administration. According to the Croydon Guardian, “Agilo specialises in ploughing money into “distressed companies” in an attempt to turn them round and secure a profit, and was owed about £4.5m by the club before it called in administrators.”

Picture the scene;

We’re in the heart of London’s Square Mile, we’re in a trendy wine bar, the cameras pans across the clientele then rests on a twat in red braces. Welcome to the world of  Justin Barrington-Stewart. The manner is effortless.  He casually shows off his Longines diver’s watch, limited edition  from Geneva. It’s part of his style; the haircut, £500; the suit, Saville Row; the shirt, off the peg at Harvey Nics; the brogues; hand stitched in Italy. He’s a man who knows what he wants, he’s a man who knows how to get it. He knows quality. In his head a bulb suddenly goes “ping!!!”. The light’s been seen!!! He brushes off the rapt attention of Penelope and Summer as if it were dandruff. When he makes a decision, he’s a man of  action!

He’s finally decided act on a tip, football is definitely his new thing.  He’d been hearing the rumours about football for a while. Everybody had been saying that football clubs could offer a killing when there is murkiness around the land ownership. So up he pops with a solution for everybody.”I’ll be out of there with a cool 3 million” he thinks…….”

Unfortunately, the sad part of the story is that the deal fell through. After this catastrophic turn of events Justin and his mates decides to get their money back. They though, “Well it’s only fair, the club have broken the verbal contract we’ve made with ourselves.” He may have been the clinical ice-man normally but this time he was livid, he’d had his eye on a new yacht and everything.

When trying to think of a parallel from the real world for the reaction of Agilo, like Justin but without the class, the Jet Set could only come up with a  mugger with a chip on their shoulder. The kind of mugger that will take their victim to court because the victim didn’t actually have as much money as they appeared to. Apart from this lovely picture there are several other good reasons why hedge funds should be considered integral parts of the axis of evil; 

  1. They can be a bit shit at what they do, (despite hedging their bets)
  2. They make their money by  betting on stocks (leading to stock market volatility and trouble for the rest of us).
  3. The managers of these funds actually think they are doing great things.

You may have seen this turd on Newsnight claiming  that hedge funds are the perfect thing for a civilised society, he  reminded us of a certain film character;

Marx had his say about these people 160 years ago

“In its beginnings, the credit system sneaks in as a modest helper of accumulation and draws by invisible threads the money resources scattered all over the surface of society into the hands of individual or associated capitalists. But soon it becomes a new and formidable weapon in the competitive struggle, and finally it transforms itself into an immense social mechanism for the centralisation of capitals.”

And still people doubt the relevance of his ideas in the modern world. Unfortunately people are still acting in the same way as Marx described, they’re just using different words.

You could argue that football clubs are mad to get involved with these people but the levels of finance the hedge funds promise must turn heads. In football there seems to be a hysteria, you have to invest at massive levels just to stand still. If you want your club to progress you will need even more investment. This is where the men in red braces come in. Enter Justin – “Master of the Universe” * 

What can go wrong?

– The value of your investment may go up  as well as down.
– Your investment may be at risk if you believe your wings are a shield of steel



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