Goldman Bails Out Of Hedge Fund Bailout

Mar 27 2008 | 2:22pm ET

Just six months after leading a bailout of one its quantitative hedge funds, Goldman Sachs is following its investors by pulling most of its investment out.

The firm has withdrawn $1.8 billion from its Global Equity Opportunities Fund, the Financial Times reports. In August, the firm led a $3 billion capital injection, which included $1 billion from investor Eli Broad and hedge fund Perry Capital, as well as $2 billion of its own money, to shore up the fund, which like its fellow quants was beset by big investment losses and redemption requests. Broad and Perry have withdrawn their investments, as well.

Goldman is maintaining a $200 million investment in the fund, which now manages just $1.2 billion, down from more than $5 billion before it posted huge losses during this summer’s market turmoil. It withdrew the bulk of its investment at the end of last month, its first chance under the terms it set in making the investment in August.

The firm told investors in GEO of its redemption last week.

Goldman reportedly has no plans to liquidate the fund—earlier this year the firm closed one of its other troubled quant funds, North American Opportunities—hoping instead that improving performance can keep the fund going. Soon after its bailout, the fund posted big gains, returning as much as 15% in the weeks following the capital infusion. Much of that gain was lost through the rest of the year, but Goldman still profited from its bailout: The onshore version of the fund earned Goldman a 6% return, while the offshore version earned it a more modest 3.7%.


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Saxby: Not All EBITDA Is Created Equal

Nov 30 2017 | 8:02pm ET

Record levels of dry powder are driving competition among private equity firms to...

 

From the current issue of