Diamondback Redemptions Continue As Performance Turns For Worse

Oct 4 2011 | 3:13am ET

Unlike the other hedge funds raided by federal agents late last year, Diamondback Capital Management survived the bad press and association with an insider-trading investigation. But almost a year after the raid, investors are still slinking away from the firm.

Diamondback and three other hedge funds—all of which have since closed—were raided by the Federal Bureau of Investigation in November. Diamondback told clients that the authorities assured it that it was not the target of the probe, and neither the firm nor any of its current employees were charged with wrongdoing. But the Stamford, Conn.-based hedge fund and a former trader, who pleaded guilty to insider-trading in the Galleon Group case, did settle Securities and Exchange Commission charges in August.

The firm was hit with $400 million in withdrawal requests at its most recent redemption date, The New York Times reports. That brings its year-to-date redemptions to almost $2 billion, a figure that could grow, given Diamondback's recent performance.

Diamondback was, like many hedge funds, battered in August. Its flagship slipped 7%, erasing its year-to-date gains and leaving it down 5% on the year. Some of those losses came after the most recent redemption date, meaning investors spooked more by the losses than the raid could head for the door at its next redemption date.

Diamondback still manages about $4 billion, thanks in part to some fundraising in August.


In Depth

MiFID2 For U.S. Firms: Key Questions Answered

Feb 27 2017 | 4:54pm ET

The January 2018 deadline for implementation of the EU’s mammoth MiFID2 regulations...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of