"TAP não sobrevive se se mantiver pública", garante Pinto Luz

[LTCM]

. For the month of February 2010, they were down a whopping 86.25%. That brought their year to date total return to -95.83%.

Immediately, questions swirl in one's head such as 'How did this happen? What kind of risk management did they have in place? How will they recover?' Remarkably, their investor letter had quite a calm tone to it. And even more surprisingly, the rationale for how such a travesty happened was quite vague.

If we were investors in a fund that lost that much money that quickly, we'd certainly want to know *exactly* what happened. While it's still not totally clear as to what happened, maybe they ought to take a look at fellow hedge fund D.E. Shaw & Co's insight on leverage.

We have heard through the grapevine though that they were massively long tin and then flipped it to a short (with leverage). Once other hedge funds smelled blood, they pounced on the opportunity to bet against his massive position. Needless to say, this is what you would call anti-risk management.

Vale a pena ler a carta aos investidores.

The good news is that whilst our NAV is obviously
impacted to the low side by this, the Fund continues
to do business as usual. The liquidity position
of the Fund is strong with in excess of USD 40 million
in cash and since the remaining physical book
is very profitable going forward, we view the future
with confidence (this confidence is being justified
by our March month-to-date result which is
showing a plus of more than +10 pct at the time of
writing).