The Peter Thiel Bubble
Peter Thiel, so-called visionary, is working CNBC hard at Davos. Why would that be the case? His hedge fund is $5 billion smaller than it was six months ago.
These should be heady times for Thiel, whose Clarium hedge fund sparked glowing press coverage (and more than a little envy). His strategy was different from most of the private pools of cash run out of places like Greenwich: Using relatively little debt, he sought to profit in times when governments meddle with markets. That should be now, right? Instead, he has been as hard hit by the credit crisis as most other hedge funds. He is down a mere 4.5 percent for the year — but that includes his phenomenal 58 percent rise from $4 billion in January 2008 to $7 billion six months later.
From July to December, Clarium's assets cratered. According to performance data obtained by Valleywag, Clarium's main fund returned negative 39 percent. Put simply, an investor who put in the fund's minimum of $1 million would have ended six months later with $600,00.
By the numbers, most did not wait around that long. Thiel's fund ended the year with only $2 billion under management, which suggests that investors took out another $2 billion, in addition to Clarium's $3 billion in investment losses. (Click to see the full document.)
No surprise there: Risk-averse investors have been pulling out of hedge funds everywhere. Thiel was right about the mortgage bubble, and right about the rising role of governments in markets. But was he right about how to make money off these developments? So far, the answer's no. And to investors, that's the only kind of vision that matters.