Peloton Partners is latest victim of credit squeeze
The credit crisis has claimed another victim as London-based Peloton Partners was forced to liquidate a $2 billion (£1 billion) bond fund following severe losses.
The liquidation highlights the seriousness of the problems in credit markets, last year the fund was a big success, generating an 87% return, primarily due to the success of its bets against sub-prime securities. However, continued deterioration of credit markets appears to have gone against the firm over the last few weeks.
In a letter to investors, Peloton said it was suspending dealings in the second fund, the Peloton Multi-Strategy Fund and would no longer try to calculate net asset values.
Peloton said that the move was due to the poor performance of Peloton ABS Fund, a fund in which the company has a large position. It added the directors have determined it is in the best interest of the company that the calculation of NAV and dealings be suspended.
The two managers, former partners at Goldman Sachs, Ron Beller and Geoff Grant, said that they ‘deeply regret’ having to suspend redemptions.
Hedge funds are private investment funds that attract wealthy investors and generally make more complicated and higher-risk investments than traditional investment funds.