Thread by @hkuppy

1/n Quick thread: Most HFs have quarterly liquidity. The redemption notice period is Q-30 or Q-45 days. Q1 was a miss for most funds, Q2 is a bloodbath. You’re not allowed 2 bad quarters. Notices have been showing up all week, the big bulge will be from tomorrow until month end

2/n PMs are in denial. These guys have had long relationships with LPs. LPs are “just putting in the notice as a placeholder.” PMs think if things bounce, maybe redemptions get rescinded. Everyone is pleading and in denial. No one knows their real liquidity.

3/n Even if you know your outflows, you don’t sell today at what you think is the lows. Imagine selling the low and having it bounce on you while you hold cash? You’ll just end up screwing the LPs that stay in bc they have no exposure to the bounce. Your CAGR is toast. You wait..

4/n As we get closer to quarter end, the selling will pick up. Everyone wants to go flat on the last day so they have the least tracking error, but that is impossible for illiquid names, impossible for big funds. The selling there has started, it will be a crescendo…

5/n I’m amazed at all the fukwitz retail baggies stepping up now to fade this move. The real selling hasn’t even started. Can we bounce? Sure. We are massively oversold—waves of margin calls ended Thursday. This is a trading mkt for the BTFD crowd. Trade em, don’t own em (yet)…

6/n The week before quarter end, the “bid wanted” situations in small cap will start. My stinker bids will get laughed at, then spanked. The liquidity isn’t there in these names. The cleanup in large cap is the last few days. I’m being patient.

7/n We haven’t had a real redemption cycle in anything but energy in a decade. Guys forgot how it goes. Many PMs are dealing with this for the first time since 2008/2009, they forgot how it works…