Hedge fund Turnberry to liquidate, give money back

Date: Friday, August 15, 2008
Author: Svea Herbst-Bayliss and Dane Hamilton, Reuters

Hedge fund Turnberry Capital Management LP, which specializes in distressed debt, is telling investors that it plans to shut down and return their money after many asked for it back.

"We intend to take a series of steps to liquidate the Fund and redeem all Fund investors at the same pace," fund manager Jeff Dobbs wrote to his clients last week, telling them that most of his clients have said they want out of his portfolio.

Approximately 70 percent of the credit derivative book has already been liquidated, Dobbs said.

"After Labor Day, we will commence a sell-down of the Fund's security holdings in order to raise cash to fund redemptions," he added.

The letter was obtained by Reuters.

Calls to Turnberry for comment were not returned.

Roughly a year ago the fund managed about $800 million, people familiar with the fund said.

On its website, Turnberry said its strength lies in identifying companies that are suffering liquidity problems, but have the assets, cash flows and motivated managements that allow them to execute transactions (renegotiation of debt, securities exchanges, asset sales or equity infusions) to solve liquidity problems.

In the letter, Dobbs thanked his clients for the opportunity to invest their money, promised to keep them informed on how he will wind down the fund and even offered them a chance to let him manage more of their money.

"Going forward, I plan to own a corporate bond portfolio," he wrote, adding that if people are interested in sticking by him, "investment details of what I plan to own will be transmitted to you upon your request."

Turnberry is not alone in facing heavy redemptions, industry analysts in the $2 trillion hedge fund industry said, noting that poor returns this year have prompted many investors to ask for their money back sooner rather than later.

Unlike mutual funds, however, hedge funds traditionally lock up their investors' money for months or even years and require lengthy notices from clients who want to exit.

These notices began to pour in earlier this year at hundreds of funds, industry lawyers and investment advisers said, noting that many hedge fund investors put in their requests by June 30.