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Geronimo Multi-Strategy, Sector Opportunity, and Option & Income - absolute return funds; various hedging strategies

2007-08-29

Count of distinct funds: 3
Capital base: ?
Loss: ?

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stories: bizjournals.com

Geronimo Financial has abruptly closed up its absolute return hedge funds (all started Jan. 2006), apparently finding they didn't achieve much in the way of hedging when the financial markets actually became challenging. A lovely self-referential explanation for the closure was given in the story (above):

No reason was given for the closings, other than saying that the fund's investment adviser, Denver-based Geronimo Financial Asset Management, "no longer plans to continue managing the funds."

We'll take that as an "if you have to ask" kind of answer, especially if you have seen the funds' year-to-date returns:

The funds have had a rough year. The Geronimo Multi-Strategy Fund (Class I) (GPHIX) is down 9.55 percent year to date, while the Geronimo Sector Opportunity Fund (Class I) (GPSIX) is down 5.28 percent and the Geronimo Option & Income Fund (Class I) (GPOIX) is down 2.44 percent so far this year.

Someone more nit-pickey than us might note that these declines are equivalent to nearly -14%, -8%, and -3.6% annualized. Maybe Geronimo's investors should find some sort of "hedged" investment "fund" to put their withdrawn cash in—oh wait—maybe hard assets would be a better bet?

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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.