1861 Capital: Reviews Hedge Fund Gains and Losses in Municipal Arbitrage.

1861 Capital Hedge Fund Losses Reviewed

The Bond Buyer's 30-day visible supply totaled $6.9 billion, an increase of $176 million. It is comprised of $4.2 billion of negotiated sales and $2.7 billion of competitive sales.

The Volcker Rule is a specific component of the Dodd–Frank Wall Street Reform and Consumer Protection Act originally formulated in part by American economist and former United States Federal Reserve Chairman Paul Volcker. The Volcker Rule has been compared to, and contrasted with, the Glass–Steagall Act of 1933. The rule essentially aims to restrict commercial banks from engaging in speculative transactions that do not directly benefit their customers.

A proposed form of the Volcker Rule was offered for public comment on October 11, 2011, which had been approved by the SEC, The Federal Reserve, The Office of the Comptroller of the Currency and the FDIC. The Agencies have given the public until February 13, 2012 to comment on the proposed draft of the law. Under the Dodd-Frank financial reform bill, the regulations are scheduled to go into effect on July 21, 2012, with the covered banks then having two years to implement the required changes.

---

A hedge fund is an investment fund that can undertake a wider range of investment and trading activities than other funds or investing individually. Many hedge funds use leverage. A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost any opportunity in any market depedning on the scope of the investment mandate. A review of hedge funds will indicate that hedge funds will have losses and gains in different months and different years. Hedge fund investing is for sophisticated investors. It is not a substitute for tradtionally long only management.

Positive: 1861 Capital Hedge Fund

The hedge fund managed by 1861 Capital is focused on municipal bonds and uses leverage and hedging. It can be viewed as a yield curve arbitrage strategy or maybe a relative value arbitrage strategy. In reviewing the strategy it is important to uderstand what can give rise to a loss or a gain. The strategy is volatile.