Glitzy Greenwich feels hedge fund pain
By Joseph A. Giannone
GREENWICH, Connecticut (Reuters) - As many hedge funds suffer big losses and anxious investors yank out their money, the town synonymous with the riches of their recent glory is now hurting.
In Greenwich, Connecticut, the luxury car dealers are quiet, the prices of mansions are declining and the retailers who have made a good living serving its wealthy residents are complaining about a sudden drop in business.
"Everything is down. We started to see it in the summer, but October is when the bottom caved in," said James McArdle, whose family has run McArdle's Florist and Garden Center in Greenwich for 98 years. "Housing sales are down and so that always cuts into our market. Fewer buyers, fewer makeovers."
For as long as there's been a Wall Street, titans of finance and industry have built their palaces in this shoreline town 30 miles from New York. Later it became home to hedge funds -- lightly regulated investment pools that made rich clients richer and turned their managers into billionaires.
According to Hedge Fund Intelligence, this town of 62,000 was until recently home to 35 firms that together managed more than $200 billion of assets, greater than the annual GDP of nations such as Chile or Malaysia.
Now, two months after the bankruptcy of Lehman Brothers and the near collapse of American International Group, financial markets are still reeling and government bailouts of banks and other financial companies continue at a breathtaking pace.
After the worst back-to-back months in a decade, some expect one third of hedge funds will be forced to shut down and others will become much smaller than they were. Billionaire investor George Soros, one of the world's first hedge fund managers and among the most famous, has predicted the industry would shrink by as much as two-thirds.
Visit this town and it soon becomes clear that things aren't quite what they used to be. One recent weekday morning, the only creature strolling the showroom floor of Carriage House Motor Cars was a tiny mouse. Continued...