GoldenTree Asset Management - credit hedge fund

GoldenTree Asset Management has informed investors that they are only allowing investors to make withdrawals from the fund in the form of securities — not cash. This "payment in kind" is not looked upon kindly by investors who are forced to choose between keeping their investment locked up in a fund or trying to sell the securities, which are often in odd lots, on their own. Per the FT:

GoldenTree, which specialises in investing in complex debt ins truments, had about $10bn under management last year. But losses and redemptions could leave it with half as much if investors made good on withdrawal requests, said a person with direct knowledge of the matter. GoldenTree declined to comment.

In a letter to investors last month, GoldenTree said "withdrawing partners that do not elect to revoke their withdrawal request will receive their proceeds primarily in kind. It is unlikely that any cash will be distributed."

This could be a problem for endowments that have little or no capability to hedge, trade or sell illiquid debt instruments. The GoldenTree letter said: "We can provide no assurances that these assets will be saleable and will no longer provide any management oversight or advice regarding such assets."

We're keep an eye on GoldenTree to see how this game of hedge fund "hardball" plays out. If you hear anything on their continuing status, please let us know by commenting below or email us!