Close to 500 hedge funds worldwide ready to announce insolvency intensifying next week’s selling
Jennifer Scheldon
Oct. 25, 2008

U.S. hedge-fund managers may lose 30 percent of assets to withdrawals by year-end while their European rivals shed as much as 45 percent. Close to 500 hedge funds will declare their insolvency in the next two weeks accelerating the fall of stocks and commodities including oil and natural gas futures.

Hedge funds are aggravating the worst market sell off in 50 years as they dump assets to meet investor redemptions and keep lenders at bay.

``I have never seen a market as full of panic as I''ve seen in the last seven or eight weeks,'''' Kenneth Griffin, founder of Citadel Investment Group LLC, a Chicago-based hedge-fund firm, said yesterday.

Citadel, addressing investor concerns that its funds may be forced to liquidate, said yesterday it has $8 billion in untapped bank credit, 30 percent of its assets in cash and ``modest'''' client redemptions.

The firm had no material losses from trading partners as its main Wellington and Kensington funds fell about 35 percent this year through Oct. 17, Chief Operating Officer Gerald Beeson said on a conference call with bondholders. Year-end redemptions will be a ``few percent'''' of assets.

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