$2 billion hedge fund Pardus suspends withdrawals |
Date: Tuesday, April 1, 2008
Author: Dane Hamilton, Hedgeworld.com
NEW YORK (Reuters)—Pardus Capital Management, a global activist hedge fund with more than $2 billion in assets, said on Monday [March 31] it suspended investor withdrawals in the face of slumping values of some of its holdings and demands for capital return. Pardus—which holds positions in both Delta Air Lines Inc. and United Air Lines parent UAL Corp. and has urged the companies to merge—said it suspended redemptions "to protect the funds and their investors from external short-term pressure." Hedge funds often suspend investor withdrawals when demands for a return of investor money would force them to off-load securities at bargain-basement prices. Shares of Delta and UAL have both fallen recently amid a general market rout. "We have taken a long-term investment perspective," Pardus said in a statement. "The funds have been disproportionately affected by recent market volatility." New York-based Pardus, which is headed by investor Karim Samii, sent a letter to investors disclosing the redemption suspension late last week. The firm said it plans to sell positions over the next 18 to 24 months to meet investor redemption demands. Such demands can be withdrawn, however, allowing firms to avoid liquidation. Pardus, which doesn't use leverage, or debt, to back its positions, typically buys large positions in a small number of companies that it hopes to influence. The firm has long been a proponent of airline industry consolidation. According to its latest regulatory filing, Pardus owned 7 million shares in Delta, 5.6 million shares in UAL, 5 million shares in carmaker General Motors Corp. and 30 million shares in auto parts producer Visteon Corp., all of which have been beaten down recently. It also held 11.5 million shares in Suncom Wireless as of December. Suncom was bought by Deutsche Telekom AG earlier this year. By Dane Hamilton
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