Many hedge funds will have trouble retaining top managers next year, thanks to terrible market performance across the board and a reward system based on that performance, The Wall Street Journal reports. To retain talent, they will have to tap into profits. Otherwise, they will have to close shop.
Hedge funds also face the prospect that many investors will redeem shares. Overall, analysts say, its likely that 15% of the hedge funds currently on the market wont exist next year.
One large hedge fund, Fortress Investment Group, is down 50% over the past year and has stopped paying dividends, according to Prashant Bhatia, an analyst with Citigroup. At GLG Partners, Bhatia estimates that 39 of its 44 funds are below high-water marks.
Even those hedge fund companies performing well face huge redemptions. Harbinger Capital is in the black for 2008, but its main fund has suffered $1.7 billion in redemptions in the third quarter and $800 million pending for the fourth quarter.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.