Bloomberg- John Devaney, who invests in subprime- mortgage bonds, restricted redemptions to protect some of his Horizon Strategy hedge funds from being forced to sell assets.
It’s “a defensive move because we had an unusually high number of redemption requests,” Michael Gregory, a spokesman for Devaney’s United Capital Markets Holdings Inc., said in an interview yesterday. One of the investors who wanted to withdraw accounted for about 25 percent of the funds’ money. United Capital, based in Key Biscayne, Florida, had about $619 million as of March, including the money-losing Horizon ABS Fund LP.
Devaney “prides himself as a risk-taker, someone who sticks himself out there,” said David Castillo, who trades asset-backed, commercial-mortgage and packaged debt securities at Further Lane Securities in San Francisco.
The decision by the 37-year-old Devaney follows the near- collapse of two hedge funds run by Bear Stearns Cos., which lost money as bonds backed by subprime mortgages declined. Prices of the securities tumbled amid an increase in home-loan defaults. Owners of similar bonds may face $90 billion of losses, analysts at Frankfurt-based Deutsche Bank AG said last week.
Devaney, who founded United Capital in 1999 as a brokerage firm and expanded into hedge funds two years ago, is senior manager of the funds that were closed to investor refunds, according to regulatory filings.
