tyb b
chugga,chugga!
do this one and then I need a break.
Two Giant Distressed Funds Gate Clients From Withdrawing Money
Until recently, funds that imposed redemption "gates" on their investors were those who had suffered a substantial mismatch between the illiquidity of their investments and the liquidity preference of their investors (which tends to be instantaneous), usually as a result of some exogenous event such as Brexit, or a media report sparking investor fears.
As a result, over the past 4 years we had seen a procession of prominent funds gating investors, starting with the junk bond fiasco at Third Avenue which led to a premature end for the asset manager, then the three largest UK property funds suddenly froze over $12 billion in assets in the aftermath of the Brexit vote; two years later the Swiss multi-billion fund manager GAM blocked redemptions, followed by iconic UK investor Neil Woodford also suddenly gating investors despite representations of solid returns and liquid assets, then it was the ill-named, Nataxis-owned H20 Asset Management decided to freeze redemptions; and finally two weeks ago the largest UK property fund, M&G, halted redemptions.
We can now add two more hedge funds to this list.
As the WSJ reports, (formerly) distressed investing giants York Capital Management and Southpaw Asset Management have also barred clients from redeeming money they have requested for year-end, a sign of the pressure that investors in distressed assets are facing.
According to the Journal's reporting, funds at both firms faced significant client redemptions, in response to which the funds erected "gates" that limit withdrawals of money from a fund. Gates rose to prominence during the financial crisis, when countless hedge funds prevented investors from pulling their money amid crashing markets, as the alternative was a devastating forced liquidation which would have only exacerbated the selloff; and aside from the handful of occasions listed above, gates have been deployed rarely since then.
York, which was founded by Milwaukee Bucks co-owner Jamie Dinan, told clients in a letter Thursday it was suspending redemptions from its nearly $2 billion Credit Opportunities fund for the year-end period and that it planned to start unwinding the fund. The fund which is run by co-CIO William Vrattos, was reportedly down 8% for the year through November.
Meanwhile, the Greenwich-based Southpaw which manages $1.2 billion, told clients in a letter earlier last week it plans to return 55% of the money they requested back for year-end. That figure however doesn’t include money investors requested that the firm is tying up in a so-called "side pocket."
As readers who have been us during the immediate aftermath of the financial crisis recall, side pockets are used by fund managers to segregate less liquid investments from the rest of a fund. When they are created in the face of significant outflows, as opposed to from the outset of an investment, they generally are an attempt to limit losses until markets improve. Southpaw, run by veteran distressed-investors Howard Golden and Kevin Wyman, told investors it had confined less liquid investments making up almost a 10th of the fund’s assets into a side pocket and would sell them off over time. Like York, Southpaw’s fund was down for the year, but less so, losing 3.7% through November.
"Our investment strategy, which is cyclical in nature, has been challenged by the unprecedented 10-year economic expansion, decreased liquidity and dramatic changes in the hedge-fund industry," Southpaw wrote. “With this confluence of events, we have determined that processing outstanding withdrawal requests in full in the current market environment would disadvantage both existing investors and withdrawing investors.”
Needless to say, we still find it rather amusing that - as we pointed out first almost a decade ago - we now get confirmation every month that the very hedge funds that praised the Fed's takeover of capital markets in the aftermath of the financial crisis, are the same ones that are now going out of business, unable to cope in a world where nothing makes financial sense any more.
And while in York’s case, the firm told clients it was suspending redemptions from its main credit fund as part of a broader plan to liquidate the fund, we find it even more remarkable that 10 years after central banks took over capital markets, some investors still believed that "distressed" is still an actual asset class in a time when there is a record number of zombie companies floating around, prevented from filing for bankruptcy thanks to the Fed's ultra low interest rate policies.
rest at link
https://www.zerohedge.com/markets/two-giant-distressed-funds-gate-clients-withdrawing-their-money
warned about gating or redemption halts earlier this year…just taking a bit longer
from 2014
ty for cap
much appreciated my nigga
#9723
>>7599920 d'oh
notables, not endorsements
>>7599939 License to kill for Britain’s secret service makes UK a police state- Op Ed/rt
>>7599946 Pelosi Jr. Worked In Ukraine With Accused Fraudster Facing Prison
>>7599952 Twatters on Soros
>>7599955 Ruth Bader Ginsburg Implies Impeachment Trial Should Include Only Unbiased Senators
>>7599974, >>7600102 TikTok has a QAnon problem- written by M. Rothy
>>7599999 chek'd quints and truth
>>7600031 Maryland mayor's wife busted buying drugs from a high school student
>>7600065 Two Giant Distressed Funds Gate Clients From Withdrawing Money
>>7600204 CHRISTIANITY TODAY and [GS] connection
>>7600081, >>7600111 Q drop ___________"5:5?"
>>7600194, >>7600180 Q Drop______Keep up the good fight, Anons.
and what a perfect spot for the ultra-rare ginga miner.
#9723
>>7599920 d'oh
notables, not endorsements
>>7599939 License to kill for Britain’s secret service makes UK a police state- Op Ed/rt
>>7599946 Pelosi Jr. Worked In Ukraine With Accused Fraudster Facing Prison
>>7599952 Twatters on Soros
>>7599955 Ruth Bader Ginsburg Implies Impeachment Trial Should Include Only Unbiased Senators
>>7599974, >>7600102 TikTok has a QAnon problem- written by M. Rothy
>>7599999, >>7600000 chek'd quints and truth
>>7600031 Maryland mayor's wife busted buying drugs from a high school student
>>7600065 Two Giant Distressed Funds Gate Clients From Withdrawing Money
>>7600204, >>7600136 CHRISTIANITY TODAY and [GS] connection
>>7600314, >>7600356, >>7600401 moar cgi cooking books
>>7600363, >>7600388 recent POTUS twat re: Coast Guard B-day-analysis
>>7600375 Dems Busted Sneaking Amnesty ‘Poison Pill’ Into 2020 Pentagon Bill
>>7600459 Jeffrey Epstein's Brother Fears For His Life-ZH
>>7600489 call to dig: Wexner to Vanderbilt
>>7600496 call to dig-Church World Service (CWS)-Ethiopian Community Development Council (ECDC), etc.
>>7600528 Iran's leader ordered crackdown on unrest - 'Do whatever it takes to end it'
>>7600543 Hussein talks up Warren behind closed doors to wealthy donors
>>7600081, >>7600111, >>7600316 Q drop___________"5:5?"
>>7600194, >>7600180 Q Drop______Keep up the good fight, Anons.
>>7600322, >>7600335, >>7600368 Q drop_____Chuck Woolery "America's newsroom"
Here ya go. Been a pleasure but three is enough for now.