The CDO fund, which Barrons's brilliantly ranked among its top 50 funds with annual returns of 44.12% which would even make Stanford and Madoff blush, became terminally insolvent in recent weeks and was shut down with its assets valued at just $362 million after being worth "billions" very recently. Which makes us wonder when will the regulators go after the peculiar marking methodologies used at hedge funds, which show everything as worth 100 cents on the dollar until the actual liquidation date, when somehow overnight things receive a 99% discount.
Highland was a big pioneer in the CDO business, issuing $3.2 billion in CDO securities in 2005 and $8.5 billion in 2006, and even had the gall to IPO its CDO business. Luckily investors were spared after the IPO was later pulled.
Oh and by the way, if you are an investor, don't wait to get redemptions... as in any redemptions. Turns out the opportunity fund’s liabilities exceeded the value of its assets “to such a degree” that there won’t be anything left to satisfy unpaid redemptions to shareholders or make distributions to current investors, according to the Feb. 4 letter.
We are certain losing his investors' livelihood will cause Highland founder Jim Dondero to have at least one sleepless night.Sphere: Related Content Print this post