New York (HedgeCo.Net) – Citigroup Inc. will close its $400 million Tribeca Convertible hedge fund in what will help wind down the $2 billion Tribeca Global Investments Group, according to a report published on Bloomberg.com. The closing of the fund has not yet been made public, but investor redemptions are thought to be the reason for the fund’s demise.
The fund uses a convertible arbitrage strategy, which involves acquiring company bonds that can be converted to common stock which in turn may be shorted. Tribeca Convertible was down a mere 5 percent this year.
This is the latest failure in a string of attempts by Citigroup to offer their clients a broader array of alternative investments. Two months ago they closed the $800 million Old Lane Partners, founded by Citigroup CEO Vikram Pandit, after investors redeemed over $200 million.
Citigroup was hit hard by the subprime-related mortgage fallout last summer, forcing its hedge funds to suffer. The bank’s Falcon Strategies funds were closed this year, even after a $500 million influx of capital by Citigroup.
CSO Partners, another hedge fund run by Citigroup also closed its doors this year after suspending investor redemptions. The company wrote down over $15 billion in losses the first two quarters of 2008.
Tribeca Convertible Portfolio Managers Andrew Wang and Jeffry Chmielewski are rumored to be thinking about starting their own fund.
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