The first quarter of 2008 saw the fewest launches of new hedge funds since 2000, with just 247, according to Hedge Fund Research Inc.
That’s down from 251 introductions in last year’s first quarter. Fund liquidations are also on the rise — 170 hedge funds closed shop during the first quarter, up from 138 in last year’s same quarter.
The funds, which cater to big institutions and wealthy individuals, gained popularity after the bear market ended in 2002.
Despite leading the market this year, hedge funds are struggling to attract assets as investors are shying away from risk. The HFRI weighted composite index of hedge funds has risen 0.13 percent in 2008 through June 6. The S&P 500 is down 7.3 percent over the same span.
That’s the spirit.
Americans continue to imbibe despite the weak economy. U.S. spirits sales grew 5.7 percent in May, according to AC Nielsen, up from a rate of 5.2 percent in April.
Lehman Brothers analyst Ian Shackleton says liquor stocks are defensive plays in a tough consumer market. He likes Diageo plc (DEO) among others. The company’s Baileys liqueur grew sales by 12.5 percent in May, says Citi Investment Research analyst Philip Morrisey. Diageo’s Crown Royal whiskey gained 11.8 percent.
Buybacks waning.
Companies are putting the brakes on stock buybacks. Repurchases by companies in the S&P 500 index fell during the first quarter from their year-ago level for the first time since 2003.
Businesses bought back $113.9 billion in stock, down 3.2 percent, according to Standard & Poor’s. That’s far from the record of $172 billion in the third quarter of 2007. Part of the drop was due to hard-hit financials.
Worse than post- 9/11.
Surging fuel prices mean the airline industry may be heading for its worst year ever. And that’s saying something for an industry that’s posted a cumulative $9.06 billion net loss since 1938.
John Heimlich, chief economist of the Air Transport Association of America, estimates the industry could lose $7 billion to $13 billion this year. The industry’s biggest annual loss to date was its $11 billion deficit in 2002, when it suffered the effects of a recession and the Sept. 11 terrorist attacks.
Much of the problem for the industry is that jet-fuel prices are up 216.6 percent since 2000, but the average fare to fly 1,000 miles is down 0.5 percent over the same span, according to the trade group.
The industry has been adding new fees and surcharges to boost revenue, rankling passengers. Several airlines, including American and United, will charge $15 for the first checked bag. The Associated Press
