Highland Capital Management | Hedge Fund Notes

Highland Capital Fund

Highland Capital | Hedge Fund Notes

The following piece on Highland Capital Fund is being published as part of our Hedge Fund Tracker Tool, our daily effort to track hedge funds in the industry.

Resource #1 (2.3.09) UBS AG, Switzerland’s biggest bank, sued Highland Capital Management LP in New York, claiming losses of at least $745 million in a failed collateralized debt obligation transaction.

Highland Capital, the investment firm founded by James Dondero and Mark Okada, failed to fulfill terms of the deal reached in April 2007, UBS said in a breach-of-contract lawsuit filed today in state court in Manhattan. UBS Securities LLC, a UBS unit, agreed to arrange the transaction and serve as placement agent, according to the complaint.

After the original transaction expired in early 2008, the parties restructured the agreement in March 2008, UBS said. UBS and Dallas-based Highland Capital agreed that the fund and a special holding company would bear 100 percent of the risk of losses, according to the lawsuit. source

Resource #2 (2.2.09) Highland Capital Management said one of its hedge funds was wiped out by losses on high-risk debt securities, making it the third Highland fund to close since October.

The managers and directors of Highland CDO Opportunity Fund, comprised of an American partnership and an offshore affiliate, determined that “it is in the best interests” of the fund to wind down, according to a letter to investors that was obtained by Bloomberg News.

The fund’s remaining assets will be distributed to creditors, leaving nothing for shareholders. source

Resource #3: (10.26.08)Highland Capital Management has slashed more than 10% of its workforce, just a week after shuttering a pair of funds.

The $35 billion Dallas hedge fund laid off more than 30 people this week, the Dallas Morning News reports. It is unclear whether the job cuts are related to the fund closures—last week, layoffs, Highland boasted about 290 employees, with 250 based in its Dallas headquarters. Source

Resource #4
: Highland Capital shuts down Crusader Fund: Here is a news piece from Bloomberg on this announcement with a picture of one of the co-founders, James Dondero to the left:

Highland Capital Management LP will close its flagship Highland Crusader Fund and another hedge fund after losses on high-yield, high-risk loans and other types of debt, according to a person with knowledge of the decision.

Highland, whose total assets under management has shrunk to about $35 billion from $40 billion in March, will wind down the Crusader fund and the Highland Credit Strategies Fund over the next three years, said the person, who declined to be named because the decision isn't public. The hedge funds had combined assets of more than $1.5 billion.

The Highland Credit Strategies fund suffered from ``unprecedented market volatility and disruption,'' according to a letter to investors that was obtained by Bloomberg News. Barclays Capital Inc. seized $642 million of leveraged loans from Highland yesterday and is offering the debt for sale in an auction today, according to a person with knowledge of the situation.

Highland, founded by James Dondero and Mark Okada in Dallas in 1993, follows firms including Sailfish Capital Partners LLC and Peloton Partners LLP in closing funds after the seizure in financial markets choked off credit and sent asset values plummeting. The average price of actively traded high-yield, or leveraged, loans has dropped to 71.2 cents on the dollar from 100 cents in June last year, according to Standard & Poor's. Read the rest...

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Tags: Highland Capital, Highland Capital Management, Highland Capital Hedge Fund, James Dondero, Mark Okada, Highland Hedge Fund Closure, Highland Capital Management LP LLC

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