Hedge Fund London Whale
Hedge Fund Exits Trades that Took Down the London WhaleSaba Capital Management, a New York hedge fund, has reportedly exited for the trades that took down the "London Whale." The series of credit derivatives trade helped sink J.P. Morgan's (JPM) Chief Investment Office with at least $2 billion in losses and created new questions about investment banks' risk management.
Saba Capital Management has exited from a series of credit derivatives trades that pitted the New York hedge fund against now-infamous derivatives trades by the London-based Chief Investment Office of J.P. Morgan Chase & Co. (JPM), according to people familiar with the matter.
The complex trade that saddled J.P. Morgan's "London whale" with at least $2 billion in losses had three key components, according to people familiar with the strategy, but the bank earlier this month reduced a substantial chunk of that exposure, traders said.
Saba's original exposure couldn't be determined and a spokesman declined to comment on the recent exit or the fund's future strategy. Also unclear is how much the fund profited on the trades. The hedge fund's master fund manages $5 billion and is run by former Deutsche Bank AG (DB, DBK.XE) credit derivatives trader Boaz Weinstein.
Bloomberg and Reuters previously reported on Saba's moves.
In May, The Wall Street Journal reported that two other hedge funds had made bets opposite the bank: BlueCrest Capital Management and BlueMountain Capital Management. Source