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Ravinder Mehra loses Midas Touch
By siliconindia
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Wednesday, 18 October 2006, 19:30 IST
New York: Ravinder Mehra, one of the prolific hedge fund investors worldwide is fast losing his sheen, according to a Wall Street Journal (WSJ)report.
Ravinder Mehra, who built a hedge fund empire based on intelligent trades and marketing, is the founder of Vega Asset Management, started in 1996 with $25 million. He was considered among the top global bond and currency trader, the WSJ said.
During its peak, Vega was managing assets of more than $12 billion with offices in London, Madrid and New York. The WSJ said he had assembled a group a hedge fund professionals to put his company in shape.
However a string of poor bets and his unwillingness to change his stance on fixed income funds has undone Mehra and his company. Vega Select Opportunities Fund, the biggest hedge fund run by Mehra, has lost about 17 percent between August and September this year.
The losses have led to investors queing up to withdraw their investments. Vega now manages just a little over about $5 billion while Mehras select fund is $1 billion down from $1.5 billion sometime back, the WSJ said.
Mehra, who was born in India, became a reputed businessman by promising investors interest that could be withdrawn each month after a 30-day notice. Quoting some investors, the WSJ said Vegas returns didn't justify their marked volatility. In the last three years, Vega has been experiencing two-month periods of double-digit percentage losses.
Vegas over dependence on bonds aggrieved problems for Mehra as he realized that the U.S. economy would not slow down but would expand and that inflation could be a problem, putting pressure on bond prices. The WSJ said as bonds rallied sharply in September, Vega's risk techniques forced the firm to exit from many of its losing positions in September. Had Mehra held on to shares, he would have more money as the prices had crashed last month.
Now Mehra is trying to make things right. He has told his investors that they have to give him 90 days notice before pulling out of the fund, which would give him more 'flexibility'.