Bloomberg – Blackstone Group LP and Fortress Investment Group LLC are seeking to take over credit funds from managers unable to support their businesses after the value of investments fell.

There are “a lot of companies that are on the block,” Tony James, Blackstone’s president, said on a conference call yesterday with investors. New York-based Blackstone, the world’s biggest private-equity company, is “looking hard at consolidating acquisitions,” he said.

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New York (HedgeCo.Net) – Clients of Fortress Investment Group LLC have requested to withdraw more than $4.5 billion of their assets over the next few months, according a statement released by the hedge fund yesterday.

The company reported its first annual loss since going public, mostly due to its Drawbridge Global Macro funds losing over 13 percent this year through the end of September.  If investors have their way, this would take a 25 percent chunk out of the total assets under Fortress’s management. 

Fortress isn’t the only hedge fund dealing with a hit of investor withdraws.  The sour economy and recent credit crisis has sent a wave of panic over some investors, prompting them to rush for redemptions.  Some hedge funds choose to “freeze” investor withdraws until the market takes a turn for the better, or until they can figure out how to wind down the fund in an orderly manner.

Fortress said it received $2.6 billion in redemption requests for its liquid hedge funds, which include the Drawbridge Global funds and the Fortress Commodities funds.  Its hybrid hedge funds, which include the Drawbridge Special Opportunities funds which saw a drop of over 7 percent in the third quarter, and the Fortress Partners funds, will lose $1.9 billion in capital because of the withdraws.  

Fortress reported a third-quarter loss of $20 million, equivalent to 4 cents a share.  A year earlier, they were posting a profit of around 26 cents a share.  The company currently manages $34.3 billion in assets, a 2.1 percent drop from last quarter.

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

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Boston Globe  – TODAY
American International Group releases third-quarter results. The insurance giant is expected to post a loss of 90 cents a share, compared with a $1.35-a-share profit last year.

Starbucks Corp. releases fourth-quarter financial results and is expected to earn 13 cents a share, down from 31 cents last year.

TOMORROW
TJX Cos. reports third-quarter results. Last year, the Framingham retailer posted net income of 54 cents a share.

WEDNESDAY
The House Financial Services Committee holds a hearing on mortgages.

Macy’s Inc. is expected to report a third-quarter loss of 19 cents a share, compared with year-ago net income of 10 cents a share.

THURSDAY
The House Oversight and Government Reform Committee holds a hearing on regulation of hedge funds.

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