Cerberus [owner of Chrysler]to bar withdrawals from two funds

Cerberus, the investment group, is barring investors in two new hedge funds from withdrawing money for three years in an effort to avoid a repeat of the large outflows that followed its lossmaking purchases of Chrysler and GMAC, the group’s executives said.

The move to introduce a three-year “lock-up” is rare among hedge funds and could pave the way for other managers to follow suit.

Hedge funds typically offer investors the chance to withdraw money every few months – a feature that contrasts with alternative asset classes such as private equity that require multi-year lock-ups.

But after suffering more than $500bn in redemptions in the past year, hedge funds’ interest in longer-term investment structures – often accompanied by lower annual fees – is growing. They are keen to avoid fire sales when investors want out, while the latter are clamouring for a better alignment of their long-term goals with hedge fund managers’ rewards.

Cerberus executives said the lock-up would apply to two multibillion-dollar funds to be raised later this year specialising in distressed investments.

The funds, Cerberus Partners II and Cerberus International II, are successors to two vehicles that were hit by redemption requests as the financial crisis struck and Cerberus’s high-profile investments soured.

Cerberus has suffered considerable losses on Chrysler, the carmaker that filed for bankruptcy in May and recently emerged from the process, and GMAC, General Motors’ former finance arm that had to be rescued by the US government.

In 2008, it recorded a negative return of more than 20 per cent, the first time since its inception in 1992 that it did not make money for investors.

Mark Neporent, chief operating officer, told the Financial Times that Cerberus was on its way to recoup those losses, saying its portfolio, excluding the two hedge funds, had recorded an 18 per cent return so far in 2009. The two funds were up between 1.5 and 3 per cent this year, he added.

Cerberus officials said the new lock-ups are driven by a desire to avoid the situation they faced in December when they unilaterally halted redemption requests from the two hedge funds in order to avoid a fire sale of their assets.

Cerberus has since relented. Mr Neporent said that investors controlling $4.77bn, or about 60 per cent of the funds’ total assets, had asked for their money back. Those funds will be placed in a wind-down vehicle that will sell assets and return money to investors over several years.

Mr Neporent stressed that those redemption requests totalled less than 20 per cent of Cerberus’s $24.3bn in assets under management and would not constrain its ability to operate its private equity and hedge funds businesses.

“We still have lots and lots of money in our core business. We have ample liquidity to do what we want to do,” he said.

However, he indicated that Cerberus, which abhors the public limelight and is run by the secretive financier Stephen Feinberg, would steer clear of takeovers of high-profile companies for some time.

“We were naive in thinking that buying Chrysler would not have been high profile. But we have always tried to avoid publicity. We are happy making money for our investors and leaving the headlines to others,” Mr Neporent said.

Americans have not yet learned the full extent of official corruption, thievery, schemes and scams involving $TRILLIONS of tax dollars aided and abetted by the dupes on Capitol Hill. Here’s Bernanke, Paulson, Merkin---salivating to divvy up the taxpayers' billions.

WHERE IS THE MONEY? $BILLIONS in taxpayer bailouts were paid to Cerebrus' Fineberg, and his partner, ex-GMAC chair, J Ezra Merkin.

HOGGING AT THE PUBLIC TROUGH In May 2004, Stephen A. Feinberg's "private investment group," Cerberus Capital Management, LP (Cerebrus is the three-headed dog that guards Hades), became majority owner of IAP Worldwide Services, Inc, one of the US Army’s largest contractors in Iraq.

In Afghanistan, Feinberg's IAP runs a drug/addiction center" in Kunduz---Kunduz is the largest opium supplier in the world. IAP also provides infrastructure support for the British Ministry of Defence in Kandahar....apart from supporting the US Army in Basra.

Feinberg's company----IAP----also serves a broad array of federal clients including the US Dept Of Defense, NASA, the US Geological Survey, the US Agency for International Development, the IRS, and a variety of other federal agencies.

WHERE'S THE MONEY? Ponzi Madoff’s pal, J Ezra Merkin, made zillions feeding funds to Bernie from his four hedge funds.....one fund was offshore. Merkin (then-GMAC chair) and Stephen Fineberg (as Chrysler owner) both got billion dollar tax bailouts.

Merkin/Fineberg co-own an Israeli bank which could have been used in scams since Israel is the only place in the world where a person can debark, enter an Israel bank with a suitcase full of cash, and nobody asks where they got it, or whether taxes were paid on it.

========================================

REFERENCE
NY POST, 8/4/09
ISRAEL-US 'CROOKS' -- AP
JERUSALEM -- Israeli police said that they had broken up an Israeli-American crime ring specializing in tax fraud and money laundering. A joint probe with US authorities led to the arrest in Israel of seven suspects. The ring members defrauded the IRS of tens of millions of dollars and deposited the money in Israeli bank accounts, according to a police statement. http://www.nypost.com/seven/08042009/news/worldnews/israel_us_crooks_182868.htm

MERKIN'S CAYMAN ISLAND HEDGE FUND As GMAC chair, J Ezra Merkin ran hedge funds as a sideline and was feeding funds into Madoff's operation (and pocketing hundreds of $millions in fees)-----Merkin's name is connected to (1) Ariel Fund, based in the Cayman Islands (a partnership between Merkin and Fortis Bank in an infamous money laundering haven), (2) Ascot Partners, (3) general partner of Gabriel Capital LP, a $5 billion family of hedge funds, and, (4) managing partner of Gotham Capital.

Merkin and Cerebrus' Stephen A. Feinberg, bought Bank Leumi from the Israeli government for $500 million. Fineberg's private equity firm---Cerberus Capital Management LP---also owns Chrysler Motors. Merkin had 62.5% of the $1.2 billion in assets in his Gabriel Capital fund invested with Fineberg's private equity firm, Cerberus..........

SWILLING TIMELINE The US Treasury bought a $5 billion stake in GMAC headed by J Ezra Merkin's; also lending $1 billion to GM IN ADDITION to the $13.4 billion the US Treasury lent earlier to J Ezra Merkin's GM, and Fineberg's Chrysler. In 2006, GM sold 51 percent of Merkin's GMAC to Feinberg's private equity firm Cerberus Capital Management LP (which also owns Chrysler).

Merkin and Cerebrus's Fineberg also co-own an Israeli bank. Israel is the only place in the world where an individual can fly in, debark, go to a bank with a suitcase full of cash and nobody asks where it came from.......... or if taxes were paid on it.

IS CEREBRUS USING SECRET FEDERAL RESERVE INFO TO PROFIT? Knowing the Feds rise and fall of interest rates could make zillions for insiders. On October 19, 2006, John W. Snow, Secretary of the Treasury under George H.W. Bush, was named chairman of Cerberus.

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.