Extreme Money

In and around New York’s Helmsley building, Stanford Connecticut or London’s St James and Mayfair (known as ‘Hedge Fund Alley’), brass plates acknowledge congregations of hedge funds. The funds are frequently named after birds of prey – ‘falcon’, ‘peregrine’ or ‘osprey’. Other names conjure images of solidity, Wesley R. Edens’ Fortress or Kenneth C. Griffin’s Citadel. The word ‘capital’ is ubiquitous. If private equity, securitisation and derivatives were alchemy, then hedge fund managers had to be the alchemists of the age of capital.

Journalist Martin Baker described the formula for hedge funds:

Take a speculative cocktail shaker. Add four ...