Rival hedge funds are preparing to take battered Galleon’s billions of client assets, as small and large investors make redemption requests from the once high-flying hedge fund.
Galleon is getting battered on all sides this week. Short sellers have been hammering away at its positions, sure that Galleon will have to liquidate rapidly to meet redemption requests. Employees are contacting lawyers and updating resumes. Clients are demanding to be let out of the fund.
And now rival hedge funds are trying to poach Galleon’s clients.
“Look, that money has to go somewhere. So we’re working to make sure we get a huge portion of it,” one senior hedge fund manager to me.
Big brokerage houses are the gatekeepers to much of Galleon’s client assets. The wealth management professionals at investment banks recommend funds to wealthy clients and will likely play a large role in redirecting the money that is withdrawn from Galleon.
At one wealth management desk inside a well-known investment bank, the sales pressure coming from rival funds is described as intense. In the past two years, little new money has come into hedge funds. This makes Galleon’s impending collapse an important opportunity for those at hedge funds charged with bringing in new assets.
“The past year has been a tough one, sales-wise. So right now I’m laser focussed on getting a piece of Galleon’s billions,” the manager said.