Friday, November 7, 2008

More hedge funds blowing up

News continues to trickle out about giant losses at some of the nation’s biggest hedge funds. The latest report comes from Farallon Capital Management — once ranked as the fifth largest hedge fund in the United States. Its flagship fund, Farallon Capital Partners, is down nearly 24 percent through the end of October, according to several people who have seen the results.

The firm is now selling its positions in various portfolios in order to meet what could be huge redemptions at the end of the year, these people said. The fund has increased its cash holdings to 30 percent of its portfolio.

A spokeswoman for Farallon declined to comment.

At this rate, Farallon is headed for its first annual loss. The San Francisco-based firm, founded by a former Goldman Sachs alumnus, Thomas Steyer, invests in various assets from stocks to distressed debt and real estate. The main fund has climbed an average of 14.6 percent annually for the past 22 years.

Farallon’s troubles are reflective of the overall nasty environment for hedge funds.

On Wednesday, GLG Partners froze redemptions at one of its large funds amid tremendous market swings.

Meanwhile, Kenneth C. Griffith’s Citadel Investment Group was down 15 percent in September and is seen dropping further in October. Lee Ainslie’s Maverick Fund fell more than 19 percent in September, and Goldman Sachs recently told clients that its $7 billion Goldman Sachs Investment Partners fund has lost nearly $1 billion since its launch in January.