Friday, March 20, 2009

Ken Griffin's Brother All Over Dutch Auctions

Black River Asset Management, which according to Hedge Fund Alert "runs many funds and at one time had $10 billion under management, [and] was hit with a slew of redemptions requests last year," has employed a spin on the reverse auction process utilized by other formerly reputable funds such as Golden Tree. The Cargill affiliate, trying to appease a wave of March 31 redemptions, has told investors to submit the largest discount they are willing to accept for their shares. Subsequent to tabulating all the bids, Black River paid out these skittish elements at an undisclosed discount to its book value at the end of February. Black River has also employed the recently (un)popular illiquid asset concept, moving 60% of its asset pool into a liquid share class, with the 40% balance going into an illiquid tranche.

Black River in February 2008 threw a life vest and subsequently hired Ken Griffin's brother Loren out of Bear Stearns (curiously a mere 3 weeks prior to the first major Wall Street implosion in March of last year). Nonetheless, it has not been a pleasant tenure for Loren, who runs Black River's convertible fund, as the general fund is fighting tooth and nail to come up with redemption-mitigating strategies. Nonetheless, maybe Loren can put his Dutch Auction experience to good use, if and when he has to advise his brother Ken on how to come up with comparable strategies. Sphere: Related Content
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