Another Hedge Fund Falls Victim to the 'Challenging Market'

Blue River Asset Management is the latest in the line of hedge fund managers to take substantial steps in the current tough market conditions, in this case - a fund liquidation. Reuters reported that Blue River Asset Management’s main municipal-bond hedge fund, which reportedly previously held over $1 billion in assets, plans an "orderly liquidation" of assets over coming months, sources said. According to the report, Blue River had suspended investor redemptions in its main fund earlier this month.

GO Capital Asset Management similarly halted redemptions from its Global Opportunities Fund, Bloomberg News reported yesterday, describing GO Capital as “at least the seventh hedge fund in the past month forced to take steps to protect itself from market fluctuations.” GO Capital focuses on listed European stocks and was founded in 2000 by Frans van Schaik, who said that the fund is not leveraged and not facing margin calls, Bloomberg reported.

“A temporary suspension of redemptions is the best defensive measure to protect the interests of the participants,” Mr. van Schaik and other members of GO Capital’s management said in a letter posted on their Web site. “Current market circumstances do not allow the fund to sell investments at a reasonable price.”

Hedge funds managing more than $5.4 billion have been forced to liquidate or sell holdings since Feb. 15. As U.S. subprime contagion spread, the MSCI World Index fell 16 percent from a record on Oct. 31 through [Tuesday]. The other funds included Peloton Partners LLP's $1.8 billion ABS Fund, Tequesta Capital Advisor's mortgage fund and Focus Capital Investors LLC, which invested in midsize Swiss companies.

Drake Management also announced that it is considering liquidating all three of its hedge funds, including its largest, the $3 billion Global Opportunities fund. Drake said yesterday that it would either liquidate the funds, continue to restrict redemptions or allow clients to shift assets to new funds, according to the report. Drake cited "challenging market conditions" for the move.

Comments

[vodka_tonic:]

eeks that's bad news. where will it end ?

2008 Mar 13 08:43 PM