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Message: Flagship Hedge Funds Liquidate
Listed below are the latest headlines from the hedge fund industry. It now appears the big flagships are keeling over. Supposedly, these flagships receive the highest degree of funding and are run by the top hedge fund managers.
Oops - VHF
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Drake To Liquidate $2.5 Billion Flagship
FINalternatives
May 1, 2008
The clients have spoken. New York-based hedge fund Drake Management will close its flagship Global Opportunities Fund. The move follows investors' opposition to a proposal to split assets between the current fund and a new fund, the firm said in a letter to investors yesterday.
Drake still plans to move forward with its new Absolute Return Fund, which has garnered $300 million in commitments.
“We are committed to launching successor vehicles for the funds later this year,” the firm said in the letter. Drake added that its founders, Anthony Faillace and Steve Luttrell, will decide what to do with the firm’s other two hedge funds by the end of this month.
Global Opportunities plummeted by 25% last year on bad bets on U.S. and Japanese bonds, among other investments. Drake suspended redemptions from the fund, in December, and in March offered investors three options: liquidating the fund and allowing investors to move their assets to a new fund, liquidating the fund outright, or extending the suspension of redemptions on the fund.
According to the letter, clients representing about $500 million of the fund’s assets voted for the switch, but others opposed splitting the assets, leading Drake to choose liquidation.
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Citigroup Clients Exit Old Lane Fund Pandit Founded
By Bradley Keoun and Trista Kelley
May 3 (Bloomberg) -- Citigroup Inc. said virtually all the investors in its Old Lane hedge fund will withdraw their money, five months after its co-founder, Vikram Pandit, was named chief executive officer of the bank.
Investors will be allowed to exit the $4.5 billion investment pool by July 31, the New York-based bank said yesterday in a regulatory filing. Citigroup, the biggest U.S. bank by assets, said it's ``evaluating alternatives for the restructuring'' of the fund.
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Och-Ziff Posts Loss, Plans New Products
FINalternatives
May 1, 2008
New York hedge fund Och-Ziff Capital Management Group posted a first-quarter loss as costs related to its November initial public offering pushed it into the red.
The firm reported a $268.1 million quarter due to $425.6 million in IPO expenses. In the same period last year, the then-private firm made an $85.2 million profit. Distributable earnings were $50 million—in line with analysts’ expectations—and economic income stood at $85.9 million, a 15% increase from the year-earlier period.
Assets under management were up 30% from the first quarter of last year, but were down marginally from the end of 2007. Och-Ziff manages $33.3 billion, as net inflows of $263 million were more than offset by investment losses of $398 million. All of the firm’s main hedge fund lost money in the first quarter, with its flagship OZ Master Fund down 0.84%, its OZ Europe Master Fund down 1.7$% and its OZ Asia Master Fund down 2.61%.
The poor performance left incentive fees down 95% compared to the fourth quarter of last year, at just $32 million. Management fees brought in $145.9 million.
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Rumson To Call It Quits
May 2, 2008
Rumson Capital, the $500 million convertible-bond arbitrage is reportedly heading towards the hedge fund scrap heap thanks to the ongoing credit crisis.
The firm has notified its investors that it is winding down its Navesink Equity Derivative Fund by June 30 because redemptions have cut the fund’s assets in half from a peak of $570 million last year, Hedge Fund Alert reports. The fund was down 13% in the first quarter.
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