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Saturday, 10 December 2016
Last updated 20 hours ago
Oct 17 2008 | 1:05am ET
Highland Capital Management is shutting two hedge funds, including its flagship, following the seizure of more than $600 million in leveraged loans this week.
The Dallas alternative investments shop, which manages a total of $35 billion, will close its Highland Crusader Fund and Highland Credit Strategies Fund, it told investors. The two funds, which hold a combined $1.5 billion in assets, will be wound down over the next three years in an effort to avoid forced asset sales.
One forced sale the firm was unable to avoid was that held by Barclays Capital, which seized $642 million in loans and sold them at auction yesterday.
The firm explained that the Credit Strategies Fund suffered from “unprecedented market volatility and disruption” in a letter to investors, Bloomberg News reports. “The environment is one where the fundamental tools to manage the Credit Strategies funds’ trading, hedging, shorting and financing are highly constrained, and in some cases unavailable.” Highland said it would sell one-fifth of the fund’s assets over the next six months and another fifth in the following six months.
For its part, the flagship Crusader fund has lost more than 30% this year, according to Bloomberg.
Highland took pains to say its seperate Highland Credit Strategies retail closed-end fund is unaffected by the closures of the hedge funds, and will continue to operate.