Carlyle Chief Says Claren Road Burned By Volatility

Nov 12 2014 | 11:56am ET

Claren Road Asset Management hit a big bump in October—a bump caused by the spike in volatility last month, according to Carlyle Group founder David Rubenstein.

Rubenstein, whose firm bought a majority stake in Claren Road four years ago, said that the credit hedge fund was caught out by the short-lived jump in volatility in mid-October. Claren Road lost about 11% in the first two weeks of last month.

“They did some things that maybe they wish they hadn’t invested in,” Rubenstein told Bloomberg Television. “Volatility was a lot more than people expected. We hadn’t had a lot of volatility in the markets the last couple of years.”

Certainly, Claren Road wasn’t the only hedge fund to take a beating in early October. It is unclear whether it, like many of those fellow sufferers, was able to trim its losses later in the month, when volatility declined.

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