Absolute Capital Management Holdings - US OTC stocks

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2007-09-19

Count of distinct funds: 7
Capital base: $530 million
Loss: ?

Bloomberg reports that Absolute, a fund shop based in Majorca, Spain, has suspended redemptions from seven of its funds, and is seeking to freeze redempetions for a year. The moves are coincident with co-founder and manager Florian Homm's departure (Homm apparently managed three of the funds) and attempts by Absolute's investors to withdrawl approximately $100 million. Absolute is seeking to restructure the problematic funds:

Under the proposed reorganization, the illiquid positions will be transferred to a new fund in which investors will get separate shares. Absolute will hire external advisers to value the illiquid assets before selling them, the company added. The other shares would track the liquid portfolio.

Surprisingly, the funds aren't fixed-income/mortgage securities funds, so we're unclear on why they "can't be valued". Clearly there is more to this story; we'll post more as we hear it.

Note: This Absolute is apparently not the same as the Absolute Capital listed on our ailing/watch list as of July 26th, which is an Australia-based fund.

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Important: This fund is on our list of hedge funds that have "imploded" (see also ailing lenders). However, please note that "imploded" is a somewhat subjective. The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.