GoldenTree Says Redemptions Will Be Paid In Illiquid Securities

Jan 15 2009 | 2:05am ET

GoldenTree Asset Management, facing huge redemption requests, is responding with something of a threat. The New York credit hedge fund is not choosing the well-worn path of a withdrawal limit or suspension, but is instead offering to repay investors in kind.

GoldenTree told investors last month that those withdrawing their investments would receive securities in lieu of cash. The hedge fund invests primarily in credit derivatives, many of which are highly illiquid and would be difficult for investors to sell on the open market.

“Withdrawing partners that do not elect to revoke their withdrawal request will receive their proceeds primarily in kind,” GoldenTree wrote, according to the Financial Times. “It is unlikely that any cash will be distributed.”

“We can provide no assurances that these assets will be saleable and will no longer provide any management oversight or advice regarding such assets,” the letter went on.

The firm saw its hedge fund fall by almost one-third last year, and has received redemption requests totaling between 25% and 30% of what’s left.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...