Thursday, 28 August 2014
Last updated 8 hours ago
Aug 30 2007 | 11:40am ET
Australian hedge fund Basis Capital Fund Management, battered by losses in the U.S. sub-prime mortgage market, is throwing in the towel on its Yield Alpha Fund after reporting losses greatly exceeding previous worst-case estimates.
The Sydney-based hedge fund manager, last year’s Australian Hedge Fund of the Year, has applied for chapter 15 bankruptcy in the U.S. and placed the Yield fund into provisional liquidation. The chapter 15 move—along with restraining orders obtained in the U.S. and Britain—will keep the fund’s creditors from seizing any more of its assets. The once A$320 million fund, which was highly leveraged and heavily invested in collateralized debt obligations, was left with just A$100 million in “assets and liabilities,” according to court filings.
Grant Thornton, hired in July to negotiate with Basis creditors, has been retained as provisional liquidator. The firm said it will report to investors on the fund’s positions in three to four weeks, according to the Australian.
Two weeks ago, Basis sharply downgraded the fund’s prognosis, saying investors could lose more than 80% of their investments. When the firm first faced trouble in the sub-prime markets, it warned that a forced asset sale could cause investors to lose roughly half of their money.
The Yield fund had already been declared in default by such luminaries as Citigroup, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch and Morgan Stanley.
One fate it may avoid is that suffered by the similarly-situated Bear Stearns: A court fight. Aussie law firm Slater & Gordon is considering a class-action, but is focusing its ire on the financial planners who recommended Basis, as well as the ratings agencies that gave it such high marks, rather than on Basis itself, the Australian reports.
Aug 25 2014 | 11:21am ET
As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…
Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...