A list of likely winners and losers in emerging hedge fund shakeout
From the WSJ: ...Here's a list of the likely winners and losers in the emerging shakeout for the hedge-fund business.

The placid markets of recent years benefited hedge funds that made aggressive moves, such as piling on borrowed money to amplify their returns. Others sold out-of-the-money options, or options conveying the right to buy or sell shares at levels that weren't near the price of the underlying stock. They pocketed profits for many months because the stocks didn't have big enough moves, so the options expired worthless.

That all could help firms like Titan Capital Group, an $800 million New York hedge fund that specializes in bets on rising volatility. Titan, which is up 10% in the past three months, is seeing a surge of interest from investors, according to someone close to the firm.

Other winners could be firms like Eric Mindich's Eton Park Capital Management and Ken Griffin's Citadel Investment Group that act as quasibanks. They can step in to make big investments at potentially bargain-basement prices in times of distress. As banks try to get out of buyout loans, fellow hedge-fund managers sell subprime mortgages and structured-finance positions, and companies feel pressure from heavier borrowing costs, these hedge funds could make attractive deals. They are already eyeing the opportunities, traders say. Eton Park is up more than 20% so far this year, according to investors, while Citadel is up about 16%. Full article:

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