Hedge Funds Teeter On Weak B&C Market
Bear Stearns here as of June 27 had reduced by half a $3.2 billion line of credit to one of its two subprime-related hedge funds, citing assets sales from the fund known as the High-Grade Structured Credit Fund.
But even as Bear Stearns reported improvement, another Florida company said it was halting redemptions from its hedge funds in the wake of market uncertainty.
In a statement, Bear said it was continuing efforts to de-leverage both the High-Grade Fund and a related hedge fund called the Enhanced Fund.
Bear's line of credit to the High-Grade Fund as of that date stood at $1.6 billion. Both funds, according to sources, had been hit with margin calls from lenders, including Merrill Lynch, Bank of America and Goldman Sachs.
In related news, Bear Stearns hired Jeffrey Lane as chairman and CEO of its asset management division. Richard Marin, the former chairman and CEO of Bear Stearns Asset Management, will remain with the firm as a senior advisor to Mr. Lane, the company said.
Before joining BSAM, Mr. Lane held a number of posts at Lehman Brothers and Neuberger Berman, including serving as vice chairman of Lehman Brothers.
And in other related news, a Florida hedge fund that specialized in bonds backed by home loans has suspended redemption requests by investors.
United Capital Asset Management, a Florida-based asset and mortgage-backed hedge fund manager, said it had temporarily suspended redemptions from several of its funds after one investor accounting for about a quarter of assets under management attempted to make a withdrawal. In a statement, the company attributed the suspension of redemptions to the volatile environment and negative sentiment.
The company said it has also "greatly lowered" its leverage on its Horizon funds. (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com