Two funds at hedge fund giant Farallon are down nearly 25% this year, with the biggest losses coming in September and October, Bloomberg reports. It’s unwinding equity positions to meet redemptions and buy distressed debt, which spells more pain for the stock market. Farallon is also pulling back $150 million it invested with outside hedge funds, some of which lost 40% this year.
Farallon Capital Management LLC’s biggest hedge fund fell 23.8 per cent this year through October, according to two people familiar with the matter, all but ensuring its first annual loss since opening 22 years ago.
The firm, which oversees $30 billion, has been selling stocks to meet expected clients withdrawals and invest in distressed debt, said the people, who asked not to be identified because the information is private. The flagship Farallon Capital Partners LP fund increased its cash holdings by 30 percentage points.
Keep in mind that losses of this size at Farallon are probably duplicated at hundreds of smaller hedge funds following similar strategies. The same goes for the Great Unwind to meet redeptions and move money into bonds.
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