Current news for this fund:
Highland Capital Management - Leveraged loans
Count of distinct funds: 3
CDO Opportunity Fund Implosion, 2009-02-20
Highland has now declared its CDO fund, Highland CDO Opportunity Fund LP, insolvent. More details from Bloomberg:
Crusader, Credit Strategies Implosion, 2008-10-16
Highland Capital Management is officially closing its Highland Crusader Fund (the flagship!) and Highland Credit Strategies after seeing significant losses, some 30% on the year for the Crusader Fund (compared to a 40% gain in 2006 and a 4.5% loss last year) according to a recent Bloomberg article.
Per the article:
The Highland Credit Strategies fund suffered from "unprecedented market volatility and disruption," according to a letter to investors that was obtained by Bloomberg News. Barclays Capital Inc. seized $642 million of leveraged loans from Highland yesterday and is offering the debt for sale in an auction today, according to a person with knowledge of the situation.
Highland Capital was the world's "largest non-bank buyer of leveraged loans" in 2007.
Original Ailing/Watch Write-up, 2008-03-06:
The Texas-based highland is in choppy waters, but has not yet gone as far as suspending redemptions, as far as we know. The FT article says:
And more on the general situation:
Highland’s fortunes underscore the rapid changes on Wall Street. At the peak of the buy-out boom, private equity firms worked to keep Highland out of deals because of its reputation for tough tactics. As the credit squeeze worsened, the same funds welcomed Highland’s cash. Now, market participants are monitoring Highland’s health because of its prominence in the leveraged loan market.
Question is how long the "storm" will last in leveraged loans. If it is, as we think, an permanent "gap down", Highland may have to ultimately book losses or shut down funds. Risk premiums on leveraged loans were simply unrealistically low, and that condition is unlikely to come back. Ever.
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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.