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WhiteBox Advisors - Whitebox Strategy Blackbox Withdrawl Terms?

WhiteBox Strategy

WhiteBox Strategy Blackbox Withdrawl Terms?


There is an article which came out today about Andy Redleaf's WhiteBox Advisors Hedge Fund and how it may be limiting withdrawls. While stories such as this are often written up in a critical fashion, many funds will need to stop widespread redemptions to ensure that assets aren't all sold at steep losses during times of low liquidity. These are $40,000 a year mechanics or joe the plumber types with their life savings stuck within the hedge funds, they are accredited investors and institutional groups which have agreed to such lock up periods, gating clauses and redemption terms. Here is the article:

Hedge fund manager Whitebox Advisors won't let customers cash out, according to a national publication that follows the lightly regulated industry that manages money for affluent individuals and institutions.

The Minneapolis firm, which runs about $4 billion in investor assets through several funds and strategies, is drafting a letter to investors that explains recent investment losses and constraints and the terms under which investors may redeem some of their money, according to the Oct. 22 edition of Hedge Fund Alert.

The publication, which circulates among investment managers, said Goldman Sachs put Whitebox in a box earlier this month by requiring that the firm double the amount of collateral it puts up against margin loans used to trade convertible bonds. That puts Whitebox in a temporary squeeze because it must put up more of its own capital and devalued holdings against its margin accounts, which are trading accounts that use borrowed money in part to invest.

Whitebox is among many hedge funds that have withheld investor funds from redemption as it seeks to buy time for a rebound or stay afloat. Andy Redleaf, Whitebox's CEO, could not be reached for comment Wednesday night. Source

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