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Post by jeffolie on Aug 15, 2007 10:29:39 GMT -6
funds' redemption day looms By Todd Harrison NEW YORK (MarketWatch) -- Today is redemption day for funds with a 45-day advance notice redemption window. What that means in plain English is that well-heeled hedge fund investors, many of whom are watching in horror as the smartest money in the Street takes a beating, will have the chance to leave the dance. This date has been circled for a while, and it isn't necessarily a call to arms. While unknown shoes continue to loom, bear market trading is the polar opposite of bull market tendencies. That may mean that we're supposed to "sell the rumor and buy the news" but that is a leap of faith that remains to be seen. Fast-forward two months. UBS is down 18%. Goldman is 27% lower. Bear Stearns Companies Inc. (BSC:The Bear Stearns Companies Inc Last: 106.39+0.39+0.37% BSC106.39, +0.39, +0.4%) , the venerable and seemingly impervious institution, is a stunning 31% below where it was. Corrections are a healthy component of any bull market, we know, but something still smells amiss in the land of flickering ticks. The reversal of fortunes around the globe has been s a self-fulfilling prophecy. With upward of $500 trillion in derivatives weaving the world together, it's easy to trace the contagion. www.marketwatch.com/news/story/funds-redemption-day-looms-how/story.aspx?guid=%7B023D26F2%2D9F69%2D4DD7%2DA861%2DC557FFDE6C2C%7D
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Post by jeffolie on Aug 15, 2007 10:59:58 GMT -6
Exiting from a hedge fund can be far more complex than selling a stock or a mutual fund. Redemption policies vary widely. Most funds will redeem your money only at the end of a calendar month, or the end of a quarter. And you generally must provide written notice in advance that you intend to redeem money. The notice period is often 30 days to 60 days, but some funds require as many as 90 days or more. Rules for redeeming money from a hedge fund are generally laid out in the limited-partnership agreement. The long notice period means that investors might not see their money for weeks, or even months, in which time markets might shift dramatically. Also, fleeing your funds now won't help avoid losses already booked. And troubled funds may freeze the ability of investors to redeem their money to keep from having to dump assets at falling prices, as Bear Stearns did recently with its Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund. Investors need to read hedge-fund offering documents and limited-partnership agreements carefully to understand redemption rules. In some cases, funds may impose a penalty on investors who try to withdraw money without giving proper notice or require longer redemption notice periods for investors who want to take out money at year end, says Ferenc Sanderson, senior research analyst at Lipper Inc. In some cases, investors have negotiated in advance special agreements with hedge-fund managers known as a "side letter," which may allow the investor to redeem money more quickly than other investors in the fund. Often, however, such agreements are reserved for very large investors like institutions. And some funds will on occasion waive the redemption period, effectively allowing antsy investors to exit early. But Mr. Gordon, the broker-dealer, says funds might be less likely to do that now. "I'm not sure now is a normal circumstance," he says. online.wsj.com/article/SB118713667527197942.html?mod=todays_us_personal_journal
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Post by beachbumbob on Aug 15, 2007 14:04:27 GMT -6
I would say there will be many PO'd investors shortly
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Post by unlawflcombatnt on Aug 15, 2007 22:01:19 GMT -6
I read the article at the above link. The following passage seems unbelievable: " Investors who successfully withdraw money from a struggling hedge fund may still be at risk. If a hedge fund fails, in some cases a bankruptcy trustee or other investors may sue investors who have already redeemed money and try to force them to pay that money back into the fund....
The trustee could argue that the hedge fund didn't value its assets correctly and that investors withdrew more money than they were entitled to, the lawyers say. This concept "may well apply to some of the fund failures we're seeing right now," because some funds involved with, say, subprime-mortgage-related securities may have a hard time valuing their assets and could wind up in bankruptcy, Mr. Mungovan says. It's "the Hotel California" syndrome, he says. "You can check out anytime you like, but you can never leave."...." Unbelievable! So if you had the common sense (or blind luck) to get your money out of the fund before it crashed, you could be forced to give some of your money back to the greedy crooks who mis-invested your money in the first place. Is this "free market capitalism"? Sounds more like self-serving Corporate feudalism to me.
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Post by unlawflcombatnt on Aug 15, 2007 22:20:15 GMT -6
Just had to put this in here for a laugh.
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