ABX Indexes Tied to AAA Subprime Bonds Tumble, Rumor Hedge Fund Liquidates

Discussion in 'Wall St. News' started by Cdntrader, Feb 27, 2008.

  1. ABX Indexes Tied to AAA Subprime Bonds Tumble, Fund Liquidates

    By Jody Shenn and Sarah Mulholland

    Feb. 27 (Bloomberg) -- Most Markit ABX indexes tied to subprime-mortgage bonds plummeted to new lows on speculation a hedge fund is being liquidated.

    An index of credit-default swaps tied to 20 subprime-loan bonds rated AAA when created in the first half of last year fell 2.6 percent to 60.33, down from 74.18 at the beginning of the year, according to administrator Markit Group Ltd. The ABX-HE- AAA 06-2 index tied to AAA rated bonds from the first half of 2006 fell 4.8 percent to 73.43, down from 87.30 on Jan. 2.

    The hedge-fund liquidation has ``been weighing on the market,'' according to a note to clients from Zurich-based Credit Suisse Group.

    Hedge funds, private and largely unregulated pools of capital, can be forced to liquidate when they've borrowed money against their holdings and can't meet margin calls as their prices decline.

    ABX indexes indicate prices for credit-default swaps linked to 20 bonds. The swaps offer protection if the securities aren't repaid as expected, in return for regular insurance-like premiums.

    All but three of the 20 ABX indexes finished at new lows today, indicating prices of the underlying debt also fell in value. The declines signal more writedowns may be ahead for banks and other investors who own subprime-linked debt. The world's largest banks have reported more than $160 billion of mortgage-related writedowns and losses, mainly stemming from investments linked to mortgages to people with poor or limited credit.

    The indexes tumbled last year from at or near 100 as investors bet rising defaults on home loans would continue.
  2. [​IMG]
  3. ?.......98-80-89-71....rally up to 80, decline to 62, then buy everything!
  4. Traders At Hedge Fund Sailfish Ordered To Liquidate Positions

    Sailfish Capital Partners is reportedly in the midst of “blowing up” and is liquidating its entire portfolio as quickly as it can, according to sources with knowledge of the situation.

    According to the sources, the two partners of the Stamford, Conn.-based hedge fund—Mark Fishman and Sal Naro—got into a shouting match yesterday and ordered their traders to liquidate all of the fund’s positions.

    “They told everyone to start selling their positions, to liquidate,” said one source. “It’s basically blowing up. Everyone is sending out their resumes. They want out. It’s basically mayhem.”

    A spokesman for Sailfish dismissed the notion that there was a fight, describing the event as a “discussion.” He added that traders are always loud, and that “it was not heated. It wasn’t anymore colorful than they usually have.”

    Redemptions are due tomorrow, and many investors are reportedly taking advantage of this date to pull their money.

    “Redemptions that are required are based on requests that were put in on Oct. 31,” said the spokesman, explaining that the fund has quarterly withdrawals with 60 days noticed, so the redemptions were not sudden or unexpected.

    As for the reported liquidations, the spokesman said, “They continue to right size the fund based on market conditions and assets under management.”

    Last year, Sailfish’s Multi-Strat Fixed Income Fund declined, losing more than 12% in August alone. In December, the fund’s performance tumbled another 4.8%.

    The fund had about $1.9 billion in assets as recently as July, but two weeks ago it managed just $980 million. It is not known how much the firm has left.

    Sailfish was founded by Fishman and Naro, the former an SAC Capital Advisors veteran and the latter a former UBS Securities global fixed-income chief.
  5. Chuck Krug,

    Did you omit the link and date on purpose? That story is old news. Jan 30th


    This isn't Sailfish, they're already history. It's a different fund. They're probably not alone either, lots of failure rumors have been making the rounds for a few weeks.
  6. Hedge Fund Sailfish Drowns In Credit Crunch, Redemptions
    February 27, 2008
    The world has indeed changed dramatically and rapidly for hedge fund Sailfish Capital Partners since August 2007. The one-time $1.9 billion firm, which lost 12% that month, has seen its assets under management dwindle to some $980 million in January amidst flagging performance and investor redemptions.

    And after weeks of batting down rumors about its demise, a source close to the firm has told FINalternatives that Sailfish is indeed winding down.

    Sailfish’s founding partners, Mark Fishman and Sal Naro, sent a letter to investors on Feb. 13 pointing to a backdrop of falling interest rates and the evaporation of several sectors of the credit market—such as the student loan market, the bridge loan market and the consumer credit market—as ingredients for the firm’s downfall.

    “August proved to be more difficult than we anticipated and the rate of decay in the credit market significantly impaired our ability to modify certain portfolio risks as quickly as we would have liked,” according to the letter, which was read to FINalternatives by an investor source. “Our portfolio was hurt by higher rated securities and a rapid deterioration of liquidity and not by subprime or subprime derivatives. Nevertheless, it was the contagion effects of subprime that spilled rapidly into structured products, the leveraged loan market and all markets in general…and now clearly this has spilled into the equity markets as well.”

    Throughout this difficult environment, the partners said they reduced risks in underperforming sub-strategies, sold off positions, and in certain cases, closed substrategies. They added that they carefully managed capital flows and were diligent not to miss margin calls, and they remain in good standing with all of their prime brokers to this very day. However, they said current difficult and illiquid market conditions were not conducive to positive returns that both they and their investors expect from their multi-strategy format.

    “Therefore, based on the above-mentioned market conditions, cumulative redemption requests and overall fund performance, Sailfish Capital Partners…has determined the normal operations of the fund is no longer in the best interest of the fund's shareholders,” according to the letter, which went on to say that the liquidation process would take three to six months or longer depending on market conditions.

    A spokesman for Sailfish declined to comment on the letter.
  7. sorry, yes, this was an old article. I posted the new one here above
  8. How many months before those two guys start up another fund? I say 8 to 12.
  9. From the future press release "..raising $2bln in new funds... in order to capitalize on mispricings and dislocations in the global fixed income markets... instruments trading below intrinsic value... unique opportunities of historic proportions"

    when it should read

    "we won't ever see the high water marks in our old fund, so we shut it down and re-open shop under a new name"
  10. It'll be called the Catfish Fund, meant to capitalize on garbage that has sunk to valueless proportions.
    #10     Feb 28, 2008