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Hedge Fund Prices Decline for Fourth Month, Hedgebay Data Show

Date: Monday, October 26, 2009
Author: Bloomberg.com

Hedgebay Trading Corp., operator of the oldest site for swapping stakes in hedge funds, said September transactions show the fourth monthly drop in prices for funds in the $1.4 trillion industry.

Transactions in September took place at an average discount to net asset value of about 17 percent, down from 12 percent in August, according to a secondary market index of prices released by Hedgebay. While prices have recovered from a record discount of 20 percent in March, investors are leery of overpaying for hedge fund investments, Hedgebay said.

“The fact that prices declined sharply in September against the backdrop of stable equity markets and the generally strong year-to-date performance of hedge funds is telling,” Hedgebay said in a statement today. “Investors didn’t want to “take the hit.”

Nassau, Bahamas-based Hedgebay said investors typically paid more than net asset value until August 2008, when they started dumping stakes.

The firm has operated a secondary market on which pension plans, endowments and other institutional investors can buy or sell hedge fund holdings since 1999. The volume of trading in September was 25 percent higher than last year and 15 percent higher than in the first nine months of the year, Hedgebay said.

To contact the reporter on this story: Tom Cahill in London at tcahill@bloomberg.net