Tremont To Unload Fund Of Funds’ Assets At Auction

Date: Monday, August 17, 2009

Tremont Group Holdings, one of the biggest losers in the Bernard Madoff Ponzi scheme, will auction off most of its remaining hedge fund assets.

The New York-based firm has hired investment bank Duff & Phelps to oversee the sale of the remaining hedge fund stakes of its fund of hedge funds unit, Tremont Capital Management, The Wall Street Journal reports. Unlike another Tremont unit, Rye Investment Management, which lost substantially all of its assets in the Madoff fraud, Tremont Capital lost less than 10% of its $3 billion in assets in the $65 billion Ponzi scheme. But, tarred with the Madoff brush, it saw investors bolt for the door following Madoff’s arrest in December.

Tremont Capital has already returned most of its capital to investors, but its remaining investments are either subject to lock-up periods or are in hedge funds that have restricted redemptions.

So instead, Tremont will unload some $400 million in assets on the secondary market. While it will mean that investors will likely get less than their investments are worth, it will mean they will get them sooner. Almost half of the holdings to be auctioned—$180 million worth—are set to be sold by October. The rest have already been sold or are awaiting sale.

For its trouble, Duff & Phelps will earn a flat fee.

All told, Tremont Group and its affiliates had some $3 billion invested with Madoff, making them one of the fraudster’s biggest victims. Of course, Tremont’s own clients don’t see the firm as a victim, and have filed a raft of lawsuits against it.