Another hedge fund in the loss column.
NEW YORK (CNNfn)
Everest Capital Ltd., a Bermuda-based hedge fund operator, reportedly has lost nearly half of the $2.7 billion it was managing at the beginning of the year, making it the latest victim in the emerging market fallout. The Wall Street Journal reports that Everest has lost $1.3 billion so far this year in its two large hedge funds, which had invested heavily in Russian bonds and Latin American stocks.
The losses include major investments by financier Nelson Peltz, chairman and chief executive of RC Cola parent Triarc Cos. Two endowments for Yale and Brown universities also suffered heavy losses, according to the report. Peltz, one of the original investors in Everest Capital Fund, reportedly had about $6 million left in the fund at the end of July and Triarc (TRY) also had a "couple of million" dollars in the fund, the Journal said, quoting a spokesman for Pelz.
In a Sept. 9 letter to investors, Everest Capital Frontier Fund founder Marko Dimitrijevic reportedly revealed the fund's value had plunged 52.4 percent in August, another 7 percent in early September and 68 percent for the year. "The magnitude of the losses on the Russian debt and the speed at which they occurred were something that I have never encountered since I began working in professional money management 17 years ago," he reportedly wrote. Dimitrijevic's other large fund, Everest Capital Fund, had lost 42 percent of its value through August.
Still, the fund is financially better positioned than Long-Term Capital Management, the hard hit hedge fund that was bailed out last week by a consortium of 14 banks and brokerages, the Journal said. LTCM was highly leveraged and was on the brink of collapse until the group of financial institutions pulled together a $3.6 billion equity rescue package.
Everest told the Journal it eliminated all leverage, which helped to insulate lenders from the fund's losses.
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