It looks like the rumour that killed the rally today was that some Cerberus funds were on the verge of default.
And now Cerberus Capital Management LP has been forced to formally comment on the rumour. Most companies loathe commenting on rumours. Hedge funds all the more so.
The rumour was apparently gaining traction among traders in London and Frankfurt this morning.
“There is absolutely no truth to the speculation,” said Tim Price, a Cerberus managing director and spokesman for the firm, told Reuters.
Losses on private equity investments in Chrysler and GMAC seem to have prompted investors pull a reported $4.77 billion from two Cerberus hedge funds. That amounts to 19 per cent of Cerberus’ total $24.3 billion in assets.