Partners’ Quarrel Leads To Turtle Fund Losses

Nov 4 2008 | 10:33am ET

The tough market conditions are bound to create some disagreements among hedge fund managers. Unfortunately for investors in the Turtle Fund, it came at a particularly inopportune time.

DFL Financial Services essentially imploded last month and has stopped trading the US$80 million hedge fund. The Lugano, Switzerland-based firm told investors in a note that it will allow them to redeem their investments after it’s worst-ever month performances.

According to the note, seen by Reuters, one of the firm’s three partners went rogue.

“Our third partner… by virtue of his majority stake in the company, revoked our trading authority and liquidated all existing positions at the… worst possible moment, arguing to protect his clients from further losses,” the note explained. The Turtle Fund lost 8.7% in September and 14% in October—including a 14% loss on Oct. 10 alone—leaving it down about 13% on the year.

In light of the majority partner’s move, the fund is now completely in cash. It has also withdrawn its contract with DFL Financial Services, with soon-to-be-former DFL director Michel Legler planning to resurrect the fund outside of DFL.

“I will reorganize and relaunch again,” Legler told Reuters. “It’s a good product.”

The reconstituted Turtle Fund, which Legler said will hold on to $8 million to $10 million in assets, will feature a new automated risk management system.


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