Investors hammered by Citi fund setback (its hedge fund return: 3cents per dollar)

FT ^ | 01/15/09 | Henny Sender

[TigerLikesRooster]

Investors hammered by Citi fund setback

By Henny Sender in New York

Published: January 15 2009 02:00 | Last updated: January 15 2009 02:00

Citigroup's Corporate Special Opportunities hedge fund is returning only 3 cents on the dollar to investors, underscoring the depths of the difficulties at the alternative investment unit once headed by the bank's current chief executive, Vikram Pandit.

The amount being returned is less than had been expected when the company decided to wind up the fund last year and came as bruising news for investors who had been prevented from withdrawing their money since January 2008.

Citi also stands to lose hundreds of millions of dollars it lent to CSO. It provided the fund with as much as $450m in credit lines and $320m in equity, while also placing assets with a nominal value of $1bn that it had bought in the fund.

Without Citi's support, the hedge fund, which invested in corporate debt, would have had negative equity, according to a person with direct knowledge of the matter.

"Every fund that invested in bank loans in Europe and used leverage did not survive," according to Citi. "At least we are giving investors cash."

[TigerLikesRooster]

Ping!

[Cronos]

Making even 3 cents per dollar is quite an achievement in the past year

[Boiling Pots]

And by golly, those geniuses that made 3 cents on the dollar are well deserving of the $300 billion bailout you and me just gave them.

Let’s see how well they do with that money...probably going straight to Arabia.

[raybbr]

Making even 3 cents per dollar is quite an achievement in the past year

It's better than a savings account.

[DuncanWaring]

Making even 3 cents per dollar is quite an achievement in the past year

The way I interpreted it, for every dollar "invested", 97 cents will never be seen again.

[org.whodat]

hedge fund is returning only 3 cents on the dollar to investors

LOL, if you cannot afford to lose it, stay out of the funds, LOL

[org.whodat]

That was returning three cents on the dollar, not making!!!

[org.whodat]

Making even 3 cents per dollar is quite an achievement in the past year

It's better than a savings account.

If you have a few hundred thousand laying around I will make the same deal with you. Send me your money and I will gladly send you three cents on the dollar in a few years. I'll even send you a set of gold plated ink pens made in china and bought at wal mart!!

[Phishfry]

Wrong, this is not making 3 percent return on investment. This fund is closing and only 3 percent of investment is being returned, do you get it?? Nothing like a savings account making 3 percent intrest. “The fund had asset value of about $58m and debt of almost $880m in November, when the decision to close the fund was made”.

http://www.wealth-bulletin.com/portfolio/content/3353019655/

[Hoplite]

You are correct - the use of 'return' here is probably not the best choice of words, as in my experience it's usually used in the context of 'return on investment', when in this case, it's a 'negative return on investment' to the tune of -97%.

[org.whodat]

You need to take a reading course!! I was explaining that to the other poster!!!

[spetznaz]

That is also how I interpreted it too ....I wonder if they mean out of every Dollar they made 3 cents (i.e. 1.03), or out of every Dollar they only have 3 cents left (i.e. 97 cent loss).

[org.whodat]

Now go back and see who said what??? I know sometimes it is hard for some people to follow the exchange.

[org.whodat]

What confused you is return, a hedge fund considered the money taken as sort of a deposit, they fund is closed they are returning what is left of the deposit.

[patton]

Be nice.

[NittanyLion]

Making even 3 cents per dollar is quite an achievement in the past year

In that case, I've got a great deal for you. Send me $100,000, and in three years I'll return $4000 to you. That's 4 cents on the dollar, or 33% better than Citi's fund!

[org.whodat]

Be nice.

Let's see, I high lighted what the first poster said, I underlined what the second poster said, then I made a comment.

And stupid tries to put someone else words in my mouth.

Ok,

[durasell]

Let’s see, I high lighted what the first poster said, I underlined what the second poster said, then I made a comment.

And stupid tries to put someone else words in my mouth.

Ok

---

You need to be clear as to the exact reasons you think cotton futures are a good investment.

[org.whodat]

LOL