Posted on 03/31/2008 10:35:13 PM PDT by TigerLikesRooster
UPDATE 1-Pardus $2 billion hedge fund suspends withdrawals
Mon Mar 31, 2008 1:12pm EDT
(Adds details, byline)
By Dane Hamilton
NEW YORK, March 31 (Reuters) - Pardus Capital Management, a global activist hedge fund with over $2 billion in assets, said on Monday it suspended investor withdrawals in the face of slumping values of some of its holdings and demands for capital return.
Pardus -- which holds positions in both Delta Air Lines Inc (DAL.N: Quote, Profile, Research) and United Air Lines parent UAL Corp (UAUA.O: Quote, Profile, Research) and has urged the companies to merge -- said it suspended redemptions "to protect the funds and their investors from external short-term pressure."
Hedge funds often suspend investor withdrawals when demands for a return of investor money would force them to off-load securities at bargain-basement prices. Shares of Delta and UAL have both fallen recently amid a general market rout.
"We have taken a long-term investment perspective," Pardus said in a statement. "The funds have been disproportionately affected by recent market volatility."
New York-based Pardus, which is headed by investor Karim Samii, sent a letter to investors disclosing the redemption suspension late last week. The firm said it plans to sell positions over the next 18 to 24 months to meet investor redemption demands. Such demands can be withdrawn, however, allowing firms to avoid liquidation.
Pardus, which doesn't use leverage, or debt, to back its positions, typically buys large positions in a small number of companies that it hopes to influence. The firm has long been a proponent of airline industry consolidation.
According to its latest regulatory filing, Pardus owned 7 million shares in Delta, 5.6 million shares in UAL, 5 million shares in carmaker General Motors Corp (GM.N: Quote, Profile, Research) and 30 million shares in auto parts producer Visteon Corp (VC.N: Quote, Profile, Research), all of which have been beaten down recently.
It also held 11.5 million shares in Suncom Wireless as of December. Suncom was bought by Deutsche Telekom AG (DTEGn.DE: Quote, Profile, Research) earlier this year. (Reporting by Dane Hamilton; editing by John Wallace and Gerald E. McCormick)
Ping!
Shades of the Great Depression????
You can still put money in it if you want!
Or you could buy some of the other investors out. At a discount of course.
Sounds like its not investments backed by debt, but the undiversified nature of that fund that is killing it right now. Too many eggs all in one basket and most of them are rotten. Oh well, buyer beware. This is what happens when you buy stocks based solely on the premise they are potential takeover/merger candidates. When the takeover/merger doesn’t occur, you usually get caught with your pants around your ankles.
It’s a hedge fund alright —— A hedge against capital gains. Makes things easier April 15th
Investors will be paid back in full. A full 28 cents on the dollar
How dumb does someone have to be to invest in a fund that invests in airlines?
My rule about airlines is: Every day is a good day to short the airlines.
Better days to short the airlines are the day after some nitwit optimist (like these clowns) have been on CNBC or Bloomberg spouting how they’re long the airlines.
No, not quite. A hedge fund is not a bank.
It is a common clause in hedge fund limited partner agreements that you, the LP, may be restricted from withdrawing money from the fund during certain times of illiquidity or pressure on the fund.
Some funds have withdrawals on a quarterly window basis. The LP’s get to declare their intent to withdraw $X from the fund by a certain date early in the quarter, and the GP’s running the fund then have n days during the quarter to raise the cash. The withdrawals then happen during a short window at the end of the quarter.
Why anyone would invest in a hedge fund is beyond me. The “2 and 20” fee structure is simply far too much money for the return and risk of these funds.
FYI - my wife and I are withdrawing as cash some of our paychecks these past two months to set aside 'just in case'. I'd encourage others on FR to do the same. You can always redeposit it later, but if your bank tumbles at least you'll have some cash to fall back on...so long as the cash holds its value.
And therein lies the rub. It's only paper whose value is strictly notional. Once peoples' trust is gone, paper backed by nothing is worth exactly that.
Hey, I know how we can save the hedge funds. Let’s cut the interest rate to zero and start printing that money Zimbabwe style! And we’ll give the fed control over everything! It’s the new Republican way.
That was my thought. The words airlines and investments don't go together. In the long run the industry has negative cumulative earnings and they all visit bankruptcy court eventually, usually multiple times.
Not only that, but there are always dreamy people willing to start a new airline and dreamy investors that will provide them money, thus there is always new competition in a shaky industry.
Our money is backed by the goods, services, and investments of the United States economy. Of course, you can send me all your worthless paper to prove your point.
Oh Geez...............my broker didn’t explain it that way!
If you want to gamble in the market there is always the down side.
I just don’t want my tax dollars to bail you out!
Where was my refund when things were riding high and mighty...or did the smoke and mirrors get in your way?
Actually, I'm somewhat fond of my Imperial Deutschmarks, although they are truly worthless.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.