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Tontine to Shut Down Two Hedge Funds

New York (HedgeCo.Net) – Two hedge funds run by famed portfolio manager Jeffrey Gendell are being closed because of heavy losses suffered this year.  Both Tontine Partners LP and Tontine Capital Partners LP are liquidating assets, although no time table has been given.

The Greenwich-based Tontine Associates, which manages over $11 billion through their four hedge funds, reached their decision after the two funds lost more than two-thirds of their value this year.  Tontine Partners was down 65 percent for the year through September September 30th, while Tontine Capital Partners plunged over 75 percent.

“The combination of falling commodity prices, massive anticipated hedge-fund redemptions and the seizing up of the credit markets caused an enormous dislocation in our portfolios,” Gendell told clients last month.

The hedge funds will be liquidated in an orderly fashion, in order to maximize shareholder returns.

Tontine Associates will continue to offer two other hedge funds; the Tontine Financial Partners LP and the Tontine-25 Fund, both run by Gendell.  Before the recent credit crisis, all of the firm’s hedge funds were posting admirable returns of almost 40 percent annually since inception.

Hedge funds as a whole have not been faring too well as of late, with research by Hedge Fund Index showing losses of over 15 percent overall this year.  The Tontine hedge funds are just the latest in a string of closures stemming from massive hits.  Big names like Drake Management, Highland Capital and Ospraie have all closed funds this year. 

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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