UPDATE 3-Cerberus to suspend withdrawals from fund-source

[D-Mack]

UPDATE 3-Cerberus to suspend withdrawals from fund-source

By Jui Chakravorty Das

NEW YORK, Dec 23 (Reuters) - Cerberus Capital Management CBS.UL plans to pay 20 percent of year-end withdrawals in cash and suspend the remaining withdrawals for investors in its Cerberus Partners fund, a source briefed on the matter said on Tuesday.

Cerberus plans to suspend year-end withdrawals for up to one year, founder Stephen Feinberg said in a letter to the investors of the fund.

"When we wrote to you at the end of September we thought the trading levels for debt were ridiculously low and there was a great buying opportunity ... we were wrong," Feinberg wrote in the letter, according to the source.

"We believe it is necessary to suspend withdrawals in part so as to to unduly increase the illiquidity of the fund for remaining investors and to permit the fund to take advantage of the buying opportunities currently available in this depressed market on a limited basis," he wrote.

A Cerberus spokesman said the company does not comment on private communications with investors.

Cerberus Partners, a fund with $3 billion to $4 billion under management, was down 15.8 percent as of Nov. 30, with the bulk of the losses occurring in October and November, the letter said.

....
http://www.reuters.com/article/merge...54334420081223

Maybe this will help the big three

[BiscayneSunrise]

Re: UPDATE 3-Cerberus to suspend withdrawals from fund-source

An apt result for people who invested in a firm named Cerberus, a mythical creature that guarded hades preventing condemned souls from ever escaping.

If people would just open their eyes, the devil is often very transparent in his dealings.

[FRED]

Re: UPDATE 3-Cerberus to suspend withdrawals from fund-source

An apt result for people who invested in a firm named Cerberus, a mythical creature that guarded hades preventing condemned souls from ever escaping.

If people would just open their eyes, the devil is often very transparent in his dealings.

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Most Hedge Funds Suck, and that's Bad News for the Industry and Investors

An ounce of regulation is worth a pound of cure, but it's probably too late

Dec. 22, 2006 - (iTulip - Eric Janszen)
Chris Calnan is interviewing me last week for this article Mass High Tech piece on iTulip, Inc. It appeared Monday, an article of local interest and perhaps not so interesting to the 99.9% of our community that does not reside in the Boston area, never mind the 30% of readers who do not even reside in the United States. Chris is asking, "Why are you so down on hedge funds?" For eight reasons. But before I get into those, I'll tell you why I like them.

Some hedge funds, like some venture capital (VC) funds, are run by highly experienced, disciplined, honest, hard working, smart men and women who make money for their clients and don't take all the money out of the funds they manage to which they are contractually entitled. Instead, they re-invest most and sometimes all of the money the fund earns that is technically theirs. The best hedge fund managers are creative with money the way software engineers are creative about solving business problems with software programs. They can take money and make more out of it in clever ways, producing higher returns than mutual funds or other funds, with not much more volatility or risk. These good hedge funds use carefully developed proprietary event driven, relative value, or macro tactical trading models, proprietary algorithms by analogy to the software industry. This is all good. Problem is, not many hedge funds are this good. Most so-called "hedge funds" suck. Let me count the ways.

[snip]

Conclusion:

The current hedge fund boom is yet another liquidity driven bubble like the VC bubble of the 1990s. After it collapses, over-regulation and negative investor sentiment will disable the industry for a while and, as sources of capital to many industries, their sudden departure from the market will damage those industries much as the technology industry was hammered by the collapse of the NASDAQ bubble and the exit of many VCs from the technology funding market. When it comes to regulations that distinguish good hedge funds from the bad, an ounce of prevention is worth a pound of cure. Apparently, the Fed, which supplies the liquidity, and the SEC, which is supposed to figure out how to effectively regulate funds to prevent abuses and limit the chance of market failures, are slow learners. Question is, how much more of this abuse can the U.S. economy take? We'd better hope it can take a lot because in 2007, the hedge fund, private equity and housing bubbles are all going to collapse together.

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