Tallying the losses for 2007

Mon Mar 3, 2008

In a topsy-turvy year, at least 49 hedge funds totaling $18.6 billion closed up shop

By Eric Baum

The spectacular decline last summer of two Bear Stearns structured credit funds may have faced the media’s harshest glare. But they are hardly the only victims of the subprime-fueled liquidity crisis: More than half of the 10 largest funds that closed in 2007, including the biggest liquidation, Sowood Capital’s $3 billion Sowood Alpha Fund, were on the wrong side of leveraged credit positions.

In total, at least 49 U.S. hedge funds, representing $18.6 billion in assets, were wound down in 2007. Long/short equity, the largest hedge fund strategy by assets, saw the most fund shutdowns: 16 funds with $4 billion. By assets, multistrategy funds bore the biggest losses, with five fund shutdowns representing $7.3 billion.

In Sowood’s case, long positions in senior debt or bank debt,...

ISSN: 2151-1845 / CDC10004H

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