Cerberus Capital Struggles with Redemptions

August 26th, 2009
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Formerly one of the most sought after investment management firms in the industry, Cerberus Capital Management is facing some difficult times as investors in its core hedge funds pull out a majority of their money. According to the Wall Street Journal, more than $4.4 billion out of the $7.7 billion Cerberus Partners Hedge Funds has been liquidated by clients disappointed with Cerberus and its founder, Stephen Feinberg.

Cerberus’ failed investments in Chrysler LLC and GMAC LLC have investors fleeing. Investors are now faced with the choice of either liquidating their holdings for an uncertain amount or stay with the firm or taking a chance with a new Cerberus hedge fund that will collect lower the usual management fees.

Cerberus, which manages about $24 billion in total assets, reported negative returns for the first time since its inception 17 years ago. Last year, its $2 billion Cerberus Partners LP fund lost 24.5% and its offshore fund isn’t doing any better.
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Related Article Tags: Multi-Strategy, Long Short, Equity, Debt and Global Macro Hedge Fund News

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