Highland CDO Fund Leaves Investors With Nothing

Feb 23 2009 | 1:37am ET

Highland Capital Management is closing its third hedge fund in less than five months, with investors in a collateralized debt obligation vehicle losing everything.

Dallas-based Highland told investors in its CDO Opportunity Fund earlier this month that what’s left of the fund’s assets would go to creditors. Clients in the fund, which managed some $361.6 million before the start of the credit crisis, will get nothing.

“We are extremely disappointed in the funds’ performance and this outcome, but believe there is no viable path to any recovery for investors,” Highland wrote in a Feb. 4 letter to investors, according to Bloomberg News. The fund’s liabilities exceed its assets “to such a degree” that there will be nothing left. The firm blamed “the unprecedented market volatility and disruption to the financial system, and the market for structured products assets in particular.”

“It is in the best interests” of the fund to shut down, the letter said. Highland itself was the fund’s largest shareholder.


In Depth

Q&A: Sancus Capital And The Disruption Of The CLO Market

Oct 5 2017 | 6:28pm ET

Traditional collateralized loan obligation (CLO) funds in the U.S. market can offer...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Finding Success as Alternatives Converge

Oct 9 2017 | 4:00pm ET

Rising interest among institutional investors over the past several years has led...

 

From the current issue of