Worst Year Ever For Canyon Hedge Funds

Dec 11 2008 | 4:49am ET

Beverly Hills, Calif.-based Canyon Capital Advisors has seen better days. In fact, the $19 billion hedge fund, founded by Drexel Burnham Lambert veterans Joshua Friedman and Mitchell Julis, is having its worst year ever, in line with the many of its peers.

According to public databases, the firm’s $55 million Canyon Capital Arbitrage Fund Capital and $2.9 billion Value Realization Fund,  a multi-strat offering, are down 39.02% and 25.14% respectively, through October. Its Balanced Equity Fund, a $268 million eraktively more concentrated version of the firm's flagship fund, is down 15.71% through September.

The firm declined to comment on its performance.

Canyon has been in the news lately in connection with the New Jersey Division of Investment, which committed $49.5 million to the Canyon Special Opportunities Fund on the same day as a controversial bailout of a BlackRock hedge fund.

According to a memo from the division, New Jersey pumped in fresh capital to Canyon because of the fund’s use of leverage combined with the unprecedented fall in bank loan prices, resulting in a need for additional investor capital to meet loan facility margin requirements.

“The alternative would have been for the funds to sell a portion of these loans at artificially depressed levels, an option we did not believe was prudent,” said the division. “In order to reduce leverage and avoid the forced selling of investments at distressed prices, both general partners chose to recapitalize their existing funds with additional capital. They plan to use the additional capital to reduce their leverage, meet margin calls and create a significant cushion in their respective financing facilities.”

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...