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Citigroup not Banking on Hedge Funds


Date: Monday, February 18, 2008
Author: Julie Scjderi, Hedgeco.net

HedgeCo.Net (West Palm Beach) - Citigroup has put a halt on investor withdrawls from CSO Partners, a hedge fund specializing in corporate debt.

The decision came about after investors tried to clear out 30% of the fundís $500 million in total assets. After the fundís dismal performance last year and the 11% loss in the fourth quarter, Citigroup was forced to put a $100 million shot of adrenaline into it.

The fundís manager, John Pickett, was forced to leave after disputes with Citigroup regarding some indecision on his part to use half of the fundís assets to buy leveraged loans tied to a German media company.

Citigroupís problems donít end with CSO. In addition to posting a record loss of $9.83 billion in the fourth quarter, other areas of their alternative investment wing havnít fared well either. Falcon Plus Strategy, another hedge fund run by Citigroup, lost 52% last quarter.

Spokemen for Citigroup blamed Falconís performance on shaky, fixed income markets. The hedge fund bet on mortgage-backed and preferred securities, as well made trades involving the relative values of municipal bonds and U.S. Treasuries. Falcon Plus Strategy was started in September 2007.