New York (HedgeCo.Net) – John Paulson, head of hedge fund firm Paulson & Co., recently spoke his mind on the wave of redemption freezes that many managers have chosen to impose. 

“We think it’s a mistake for our managers to use gates and other tools to limit investor access to their funds,” Paulson stated in a recent outlook to investors that was obtained by Bloomberg News.  “While we recognize the difficulties of the current environment, we think it is a manager’s responsibility to raise liquidity to meet the redemption needs of their investors.”

Paulson’s hedge funds did not see the effects of the troubled economy, where most funds posted their worst year to date.  In fact, when the subprime crisis wreaked havoc on the financial markets, Paulson was catapaulted into billionaire status, by successfully predicted the housing mess.  His hedge funds, in turn, were up about $15 billion in 2007.

This year also saw admirable gains, with his Advantage Plus Fund climbing 3.19 percent in November, and currently up 38 percent on the year.  His slightly smaller Advantage Fund was also up 21 percent through the end of November.

Most other funds haven’t experienced that level of success this year.  According to the Credit Suisse/Tremont Hedge Fund Index, funds are down over 19 percent on the year through the end of November.  Dozens of large, reputable funds have suspended withdrawals including Citadel, RAB, Harbinger and Cerberus, just to name a few. 

Paulson also disagrees with managers that “have the cash and one of the stated reasons for restricting withdrawals is so the manager can continue to invest in new opportunities.”

Paulson’s firm is teaming up fellow New York firms Dune Capital Management and J.C. Flowers & Co. to purchase failed bank IndyMac.  A deal is expected to be finalized in the near future.

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

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
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Tags: advantage fund, billionaire, capital-management, credit-suisse, financial-markets, harbinger, hedge-fund-index, hedgeco, index-funds, indymac, john paulson, liquidity, new-opportunities, rab, subprime crisis, tremont-hedge-fund-index, troubled economy, withdrawals

New York (HedgeCo.Net) – New York-based Harbinger Capital Partners has capped year-end withdrawals from its largest hedge fund after investors moved to pull $3.5 billion of capital. The hedge fund, run by Philip Falcone, will only honor 60 to 70 percent of the requests, according to a report by Bloomberg News.

The Harbinger Capital Partners Master Fund, which manages approximately $10 billion, has never posted a losing year since its launch in 2001. While 2007 saw returns of 115 percent, the fund has lost 23 percent through the end of November, according to the report which cited people familiar with the matter.

Harbinger is just one of dozens of hedge funds who has suspended redemptions this year amidst unfavorable market conditions. Large firms like RAB, Pardus and Citadel are just among a few who have halted withdrawals in hopes of waiting out the storm and avoiding a liquidity crunch.

Harbinger likes to invest in companies either going through mergers or in companies they feel they can strategically change for the better. The firm made headlines when they sought seats on both the New York Times and Media General; two companies in which they invest. They won their board seats after a much publicized proxy battle earlier this year.

Hedge funds as a whole have suffered this year, posting record losses. According to the Credit Suisse/Tremont Hedge Fund Index, hedge funds are down over 19 percent on the year through the end of November. It is estimated that the once $3 trillion industry will manage a mere $1 trillion at the start of the new year.

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

HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Be sure to check out our sister sites. www.hedgefundlounge.com, www.hedgefundtools.com, and www.hedgefundemployment.com

Tags: accredited-investors, credit-suisse, falcone, harbinger, harbinger capital partners, harbinger capital partners master fund, hedge-fund-index, hedgeco, launch, liquidity, new york times, pardus, proxy battle, rab, record losses, redemptions, sister-sites, tremont-hedge-fund-index, waiting out the storm

Bloomberg – Energy Capital Management and Nordic Commodity Funds AB’s hedge funds are outperforming the competition in European energy markets, where power prices fell as much as 17 percent last month from a record.

Energy Capital’s MMT fund returned 19.2 percent through July, according to a letter to investors, the best result in a Bloomberg survey of 11 funds in Europe’s electricity, coal, natural-gas and emissions markets. Alfakraft AB’s Alfa Energy Fund posted the biggest drop, at 17.9 percent, according to its Web site.

The plunge in power prices and related commodities since early July ended a four-year surge in electricity costs that enabled funds to provide better returns than stocks and bonds. Coal costs, which affect European power markets, more than doubled in the first half, before sliding 13 percent in July.

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Tags: 1-million, aluminium, downside, liquid-markets, medallion, money-managers, pacific-ocean, rab, seven-months, star-bulletin-hawaii, vision-ltd