Bear Stearns Shuts Asset-Backed Hedge Fund After Loss
Thursday, January 10, 2008 : PermalinkBloomberg - Bear Stearns Cos., the fifth-largest U.S. securities firm, is closing a hedge fund that invested in asset-backed securities, abandoning a salvage plan after the fund plummeted at least 39 percent last year.
The Bear Stearns Asset Backed Securities fund, which in August held about $900 million of investments backed by assets including home mortgages, dropped 21.4 percent in November alone, the New York-based company told investors in a Dec. 20 letter obtained by Bloomberg News. The fund lost more than $300 million between August and the end of November.
Bear Stearns said it would return $90 million in cash to investors immediately. The fund’s remaining assets, which the company valued at about $500 million as of Nov. 30, will be sold and the proceeds refunded over an unspecified period of time, according to the letter. Bear Stearns spokeswoman Jane Slater confirmed the letter’s contents.
`Based on continued market deterioration, we believe that a furtherance of the strategy, even under a longer lock-up, would not be in the best inte…