Millions held in hedge funds lockdown

FT ^ | 10/01/08 | James Mackintosh

[TigerLikesRooster]

Millions held in hedge funds lockdown

By James Mackintosh

Published: October 1 2008 23:43 | Last updated: October 1 2008 23:43

An increasing number of hedge funds are telling customers they cannot have their money back as rising withdrawals and exposure to Lehman Brothers hit the industry.

The inability to access money has already had a knock-on effect: Absolute Return Partners’ Millennium Wave, a small fund of hedge funds, has had to tell its customers they cannot have their money back until it can retrieve it from the funds in which it invests.

Luqman Arnold’s Olivant is also struggling to access its shares in UBS, which are stuck at Lehman’s London arm, meaning it will not be able to vote them until they are returned by Lehman administrators.

This week was the final date for clients to put in re-demption requests for many funds in order to get their money back by the end of the year, and the industry is worried about the scale of withdrawals.

In particular, funds of hedge funds servicing wealthy individuals have been bombarded with re-quests for billions of dollars of withdrawals

[AndyJackson]

You know. You could just move the funds to treasuries and not have to take the tax and penalty hits.

[always vigilant]

Exactly

[saganite]

The major portion is already in money market funds. Virtually no return. I was thinking of converting enough into cash to pay off the mortgage if I had to.

[AndyJackson]

It is about the average Joe. Where else are they going to get the money to repay themselves?

[jas3]

What is what Paulson said?

jas3

[Toddsterpatriot]

Absolute Return Partners’ Millennium Wave, a small fund of hedge funds, has had to tell its customers they cannot have their money back until it can retrieve it from the funds in which it invests.

Fund of funds, one of the all-time-dumbest investment ideas.

[Toddsterpatriot]

I swear, I have been considering closing out my 401 and IRA and taking the tax and penalty hit just to have the cash in hand.

Yeah, selling low and paying 10% (penalty) plus taxes (15% or more) to Uncle Sam sounds like a great idea.

You could take a cash advance on your credit card (3% fee plus 20%? annual interest) if you wanted cash in hand. Why do you want cash in hand?

[jas3]

THat’s what this bailout is about folks, it ain’t about the average joe at all.

Actually the bailout is about the average joe. The rich folks don't need a bailout. But when large numbers of businesses fail and larger numbers of people lose their jobs and home values fall > 50% peak to trough, it will be too late to "do something" about the unavailability of credit.

However, I don't really care about the average joe, and thus I don't support the bailout. I find it funny watching joe defeat his last chance to preserve his job in an over-levered economy, whilst I sip mojitos from aboard my yacht. /sarc

jas3

[Toddsterpatriot]

I was thinking of converting enough into cash to pay off the mortgage if I had to.

If the end comes, why pay off the mortgage at all?

[saganite]

Why do you want cash in hand?

Bullets.

[Toddsterpatriot]

Put the bullets on your credit card, save the cash for something else. LOL!

[Travis McGee]

“has had to tell its customers they cannot have their money back until it can retrieve it from the funds in which it invests.”

Good luck with that! THis is known as “cascading cross-defaults.”

[AndyJackson]

If he bought gold bullets with his CC it would cover all the angles.

[spokeshave]

"I was thinking of converting enough into cash to pay off the mortgage if I had to.

If the end comes, why pay off the mortgage at all?

In my case...I paid off my mortgage...and avoided paying $800 an month for 28 years.

[GOPJ]

They must not have told their investors hedge funds are high risk.

The super rich think they're entitled to eternal "wins".

[freespirited]

Why not just move the money into FDIC insured assets and keep uncle sam’s mitts off of it?

I buy CDs through my brokerage account at Fidelity. You put in an order just like you buy a stock. No hassle.

[pointsal]

Sounds like these “hedge” funds forgot to hedge.

Hedge Fund is such a misnomer...