Bearish Funds Set for Redemptions, Cramer Predicts

Date: Friday, October 2, 2009
Author: DealBook.blogs.nytimes.com

Jim Cramer, colorful market pundit, is betting that hedge funds who made bearish calls are about to be hit with a wave of redemptions that will prove fatal.

In the same way that bullish funds were battered last October by burned investors pulling their cash, bearish hedge funds are about to be slammed by redemptions notices that will put them out of business, Mr. Cramer writes on BloggingStocks.

Mr. Cramer says of last year’s exodus of investor money:

Oh, sure, last year some of the bulls were able to stumble through the fourth quarter, but October was a horror show and they ended up getting huge redemption letters and spending the rest of 2008 selling into the strength of the rally to return capital to investors and lock in losses.

I expect the same thing to happen to the bears starting today with the October redemption letters and wires hitting their assistants and their bookkeepers.