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Penta Japan Hedge Fund Freezes Payouts, Citing Inactive Market
By Katherine Burton
New York, Dec. 14 (Bloomberg) -- Penta Japan Fund Ltd., a Tokyo-based hedge fund managed by former Soros Fund Management traders, told investors it was freezing redemptions on the $650 million fund after losing almost half its value this year.
It's the biggest Japanese hedge fund to close this year.
John Zwaanstra, the fund's manager, said in a letter to investors that limited trading in shares of small Japanese companies and high-yield bonds means the fund couldn't sell securities to meet withdrawals without hurting other investors.
Current trading volumes ``do not allow the fund to dispose of some of the remaining positions without adversely impacting the value of the fund's holdings,'' Zwaanstra said in the note dated Dec. 12.
Redemptions will be suspended until the fund can sell its positions without taking heavy losses, he said.
The Japanese fund's troubles follow similar stumbles that led to retreats by some of the world's largest hedge funds this year. George Soros scaled back risky investments and Julian Robertson, who ran Tiger Management LLC, retired.
Jeffrey Vinik, the 41-year-old manager of one of the biggest and best-performing hedge funds, said unexpectedly last month he's retiring and returning $4.2 billion to investors.
Zwaanstra started the Penta Japan Fund in May 1998, after leaving Soros five months earlier. He initially raised more than $500 million. In the second-half of 1998, he returned about 15 percent, and last year his fund rocketed about 154 percent, according to an investor.
This year the fund tumbled about 46 percent through November. The Nikkei 225 Index has dropped 27 percent in dollar terms this year.
Zwaanstra wasn't available to comment. |
