Uh-oh: The barring of redemptions combined with illiquid investments and the prospect of a possible future loan covenant breach in the event of a big asset decline (that's apparently not yet imminent) sound like flashing warning signs for huge hedge fund GLG. Former star fund manager Greg Coffey seems to have gotten out in the nick of time.
It is also going to stop investors making withdrawals from its $1.5 billion (£930m) Market Neutral fund for six months. The review will decide the best way to preserve capital in GLG’s 40 funds.
The Mayfair-based firm, run by founders Noam Gottesman and Pierre Lagrange, will also tell investors looking to quit the $2.5 billion Emerging Markets fund that they will not receive a full return as a tranche of the fund’s investments is too illiquid to sell.
The Emerging Markets fund, which has lost half of its value this year, has been hammered by stockmarket chaos in countries such as Russia where wild price swings have led regulators to suspend trading.
It has also emerged that New York-listed GLG would breach a loan covenant if the total assets under management fall below $15 billion this year, according to a Securities and Exchange Commission filing. However, its funds are still well above this level.
Hedge fund giant GLG warns investors about big shake-up - The Times of London
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