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Every generation has its “Masters of the Universe.” In the late 1980s, it was junk bond impresario Michael Milken and the gang at Salomon Brothers that writer Michael Lewis captured brilliantly in “Liar’s Poker.” In the 1990s, it was the investment bankers and analysts like Frank Quattrone and Mary Meeker that made fortunes hawking Internet stocks to the masses.
This generation’s “Masters” are the hedge fund managers who have become billionaires by developing exotic trading and investing strategies that few understand, strategies that have enabled them to charge fees of up to 3% and 4% of assets AND keep 20% of trading profits. But the subprime blowup looks like its going to claim a number of these modern-day masters, perhaps including John Devaney, a 37-year-old hedgie who owns not only a 143-foot-yacht but an 1823 reproduction of the Declaration of Independence, and has been profiled in Money magazine and The New York Times, to name a few publications (here’s a link to the Money story, and the Times story, though the Times is a version cached by Google). Today comes news that Devaney has halted redemptions by investors looking to exit, because he doesn’t want to have to be a forced seller in this environment. That’s not a good sign, and could be evidence that Devaney is no longer a master of his domain.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.