Well it looks like the recent rumors about hedge fund(s) blowing up were true. London-based hedge fund Bailey Coates just shut down its US operations after poor results. Apparently they were not one of the funds which got caught in that bad GM trade though:

The rumours about hedge funds in trouble began two weeks ago when shares in US auto giant General Motors unexpectedly jumped, after investor Kirk Kerkorian bought a stake in the company. This supposedly caught out hedge funds who were short of the stock, after betting the price would fall, and long of General Motors bonds, hoping they would rise. In the event, the opposite happened and they lost money.

Jonathan Bailey, the 36-year-old founder of Bailey Coates, said last night that this did not apply to his firm as it did not borrow to make investments and had no exposure to the automobile sector

While searching for details about this closure I found an interesting article which mentioned that the head of Bailey Coates recently complained about being targeted by other funds:

A founding partner of a London-based hedge fund that has seen its assets shrink by at least a quarter has blamed speculators and short-sellers for his company’s difficulties.

Jonathan Bailey, a founding partner of Bailey Coates asset management, a long-short equity fund, on Thursday said other hedge funds and the proprietary trading desks of investment banks had attacked his company’s portfolio on rumours of redemptions from the fund.

I never thought I’d hear a hedge fund complain about short-sellers. Ah, capitalism at its finest! :-)