Here is how it starts: A couple of things go slightly awry at a hedge fund. Perhaps a principal leaves, perhaps quarterly performance is slightly below that of peers — or of the market.
That precipitates a spate of stories in the trade press. Performance is worrisome! People are leaving!
Investors begin re-thinking what they once valued, and they start withdrawing their money. But in leveraged-up hedge funds, withdrawing a dollar can be like withdrawing two or three dollars, or more. Building up cash to handle redemption replaces strategic investments as topics for morning meetings, and performance falls further.
Unless there is an immediate turnabout in results, rumored wobbles at the hedge fund becomes a self-fulfilling prophecy, and the fund is in dire trouble.
Such, apparently, is what is going on at Andor Capital. While spokespeople deny that anything is awry, as they must, Barron’s says that the buzz is that the technology-loving Andor is having investor troubles. Put it this way: If there wasn’t trouble before, there will be now that Barron’s has people thinking about their Andor investments.