Current news for this fund:

Sankaty Advisors (Bain Capital) - highly secured corporate loans


Count of distinct funds: 2
Capital base: $4 billion (?)
Loss: 40 and 50% for the two affected funds

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The WSJ recently reported that two Sankaty Advisors (the credit affiliate of Bain Capital) funds have "lost between 40 and 50%."

The specific funds affected are Sankaty's Special Situations and Prospect Harbor, which the WSJ article notes "had roughly $4 billion in assets just a few weeks ago" (The article was published on October 23, 2008).

Regarding the funds, the WSJ writes:

The Sankaty funds averaged about a dollar of leverage, or borrowed money, for each dollar of capital that belonged to investors. That level of borrowing was relatively low compared with many other investors, but it shows how even seemingly low-risk bets have suffered as the credit markets have virtually frozen.

Sankaty -- named after a lighthouse in Nantucket, Mass. -- was co-founded by Bain managing director Jonathan Lavine in 1997 after a stint in Bain's private-equity unit. The group now employs 150 professionals with commitments of some $33 billion across a range of fixed-income strategies. Along with a handful of Bain executives, Mr. Lavine is a co-owner of the Boston Celtics National Basketball Association team.

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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.