The New York Times reports that a $2 billion hedge fund, Sailfish Capital Partners, has closed up shop -- flipped over by a lousy January. Granted, it was a tough month -- the average stock-picking hedge fund sank 4.1% in January. The S&P 500 was down 6% so that does not seem as bad -- but it was the hedge fund industry's worst performance since November 2000.

Hedge funds are big business. Since 2000, the number of funds has more than doubled, to 10,000 and they manage $1.9 trillion in assets. I guess that lousy performance explains why hedge funds have not been much help when it comes to recapitalizing U.S. banks. But I am a bit surprised at their lousy January performance. My newsletter was up 28% last year -- beating the S&P 500's 3.5% -- and up 2% in January thanks to one stock pick that rose 8% during the month.

Maybe I was just lucky but hedge fund managers are supposed to be masters of the universe and they certainly get paid enormous amounts of money -- 2% of assets under management plus at least 20% of the profits they generate above a minimum benchmark. And if hedge funds keep losing money, it's not clear how much longer it will be before some of the owners of that $1.9 trillion in assets start to withdraw their funds.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.