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Carrington Capital Management - mortgage-backed securities

2008-03-24

Count of distinct funds: 1
Capital base: $1B
Loss: ?

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stories: ft.com

Carrington Capital, a hedge fund co-founded by the illustrious New Century Financial Co., presumably to make sure the privilege of not only originating but also owning toxic mortgage securities wasn't completely monopolized by others, finds itself in trouble:

Carrington Capital Management, a $1bn hedge fund specialising in mortgages, is trying to persuade its investors to lend it up to $200m to replace bank loans, in the latest sign of concern about banks pulling credit lines to hedge funds.

And shocked we all are. The article continues:

Carrington, part-owned by failed US subprime lender New Century, has offered investors an 18 per cent interest rate on new preferred shares it plans to issue. The fund said it was concerned about short-term reverse repurchase, or "repo", financing, although it told investors it maintained good relations with its remaining lenders.

...

Carrington has frozen redemptions by its investors. It said it would focus on paying off debt before returning any cash, and that it missed a planned repayment at the end of last year.

Looks like this one has a bright future. At least, if you think so, they'll be happy to take your money. Now there, one at a time, all you "accredited investors"!

Combine this news with revelations in litigation that 'AAA' MBS has lost as much as 30% of its value and subprime as much as 95%, and you wonder why these guys bother.

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Important: This fund is on our list of hedge funds that are apparently ailing or which we think are worth watching for any other reason. Ailing funds haven't shut down, but they've suffered significant value declines and/or temporarily halted redemptions. Funds on watch may not even have unusual declines, but may be posted if it is felt there may be risk of developing a more serious condition eventually.