GLG’s Black Monday

Nov 11 2008 | 4:43am ET

Yesterday was a dark one for GLG Partners. The London-based, New York-listed hedge fund announced that it is limiting redemptions from another of its funds, the fourth GLG vehicle subjected to an asset freeze since last month, and reported double-digit declines in both profits and assets under management.

GLG is limiting withdrawals from its largest fund, the $2.9 billion European Long-Short Fund, in an effort to avoid forced asset sales. The firm has placed some of the fund’s assets into a side-pocket, mirroring moves it made with its Emerging Markets Fund last month, following the departure of its star manager, Greg Coffey. Coffey has since joined Moore Capital Management. Last week, GLG suspended redemptions from its Market Neutral and Credit funds.

European Long-Short, which is managed by GLG co-founder Pierre Lagrange, is down 14.6% through September.

Meanwhile, the firm said its third-quarter profit, excluding acquisition costs related to its reverse-initial public offering last year, fell by 25% to $21.8 million. Assets under management also took a big dive, falling 27% to $17.3 billion.

A big chunk of the asset loss can be attributed to Coffey’s departure, as the size of his funds fell by $1.3 billion. Nor does it help that most of the firm’s 48 funds were in the red for the quarter: GLG’s overall returns fell 14% during the quarter, and have shed another 6% since.

“Redemptions are clearly accelerated and we’re not immune,” GLG co-CEO Noam Gottesman said on a conference call. He said the firm “will be reducing headcount,” and does not believe its AUM will fall below $15 billion this year.


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