Seeking Alpha – It’s a tough world out there – I saw in the Wall Street Journal the average hedge fund lost 18% in October. Considering what their mandate is i.e. hedge – that is amazing. September was awful as well. We see stories of hedge funds that are performing well (in this market losing 10% in a year is "great") and still facing redemptions because their investors need the cash…. as Ross Perot famously said… there is a "giant sucking sound" in our capital markets.

In a world hard up for cash, even hedge-fund winners can wind up losers. Such is the fate of major credit fund Blue Mountain Capital Management, whose investors have begun yanking investments despite the fund’s performance this year, a modest 2.4% loss, compared with an average 20% loss across all funds. Blue Mountain is a major player in the credit markets, with assets of $5.5 billion invested in bank loans, bonds and credit-default swaps. Its primary fund, the $3.1 billion Credit Alternatives Fund, had lost 2.4% this year through Friday.

Performance was largely beside the point for many Blue Mountain investors, who need access to cash. The perverse effect is that some investors have begun raiding their better-performing investments, giving the laggards a chance to recover.

Read Complete Article

Tags: 100-million, alan-greenspan, arch-nemesis, carrington-capital-management, feldstein, fink, institutional-marketing, journalism, loans, maverick, may-24, money-managers, ploy

Reuters – Blue Mountain Capital Management LLC has temporarily halted redemptions at its largest hedge fund after clients asked to withdraw money despite its "distinguished" performance, according to a letter to its investors.

New York and London-based Blue Mountain said in the letter it had come up with a "redemption and recapitalization plan" to protect all its investors in the $3.1 billion Blue Mountain Credit Alternatives Fund.

The fund is down 2.4 percent year-to-date, the letter said, far less than the average fund which has lost 20 percent this year. Blue Mountain has a total of $5.5 billion assets under management.

The pressure on the credit fund came from some large fund-of-fund investors, "themselves facing liquidity pressures from their own investors," submitting significant redemption notices, the letter said.

"If we were to unwind or sell positions to meet current redemptions, the severe liquidation costs would be borne inequitably by the remaining investors," wrote CEO Andrew Feldstein in the letter, seen by Reuters.

Read Complete Article

Tags: 100-million, board-of-directors, cheap-stock, external-managers, february-12, feldstein, finance, investment-arm, mortgage-markets, mutual-fund, objections, pardus-capital-management, third-party