|Hedge Funds Get the
Short End of the Internet Stick|
By Erin Arvedlund
1/20/99 3:49 PM ET
Savvy investors, including hedge funds like Parker
Quillen's Quilcap in New York, swallowed dynamite in the fourth
quarter when they shorted Internet stocks -- a seemingly sound strategy in
a nutty sector.
Quillen, called a brilliant hedge-fund manager by four industry colleagues, was having a stellar 1998 with his Quilcap funds. One was up roughly 30% through the third quarter. But now some are expected to report fourth-quarter losses as well as 1998 losses because of the shorting of Internet stocks -- among them Amazon.com.
According to hedge-fund tracker Tremont Advisers, Quilcap's Little Wing fund took such a hit from Internet shorts that returns reversed, and the fund ended down 34% for the fourth quarter and 12% for the year. Tradewinds was down 11.44% for the year. A Quilcap representative confirmed the annual return figures and the fact that the funds had been up "substantially" earlier in the year.