Fortress suspends redemptions for now

 

BOSTON (Reuters) - Fortress Investment Group told investors on Wednesday that they won't be able to get their money back for a while, becoming the latest hedge fund firm to suspend redemptions as investors try to exit.

Fortress, one of only a small number of publicly traded hedge fund and private equity groups, said its board of directors unanimously agreed to temporarily suspend pending redemptions after investors asked to pull out roughly $3.51 billion (2.4 billion pounds) by year's end from its Drawbridge funds.

The news helped push the company's share price down 25.6 percent to trade at $1.86 in afternoon dealings. They fell as low as $1.71 at one point.

"This action will result in amounts requested for redemption with respect to the November 30, 2008 and December 31, 2008 redemption dates remaining part of the Company's AUM (assets under management) for so long as the suspension remains in effect," the company said in a regulatory filing.

Fortress estimates that the Drawbridge Global Macro Master Fund Ltd and its three feeder funds will have approximately $3.65 billion in assets under management on January 1.

At the end of the third quarter, Fortress said it managed $34.3 billion in assets.

Fortress founder and Chief Executive Officer Wes Edens had braced for redemptions and told investors on a conference call last month that the company, like the rest of the industry, would likely face more of these requests in the "grim" market environment.

Suspending redemptions was once a sign that a fund was about to fail, but it is now a much more accepted tool to safeguard capital -- for a while at least, industry lawyers said. They added that managers are no longer ashamed to say they aren't letting investors out just yet.

Late last week Tudor Investment Corp told investors in its $10 billion BVI Global fund that they would not be able to exit in the next months as managers restructure the fund.  Continued...