Citigroup blocks withdrawals from a hedge fund

Posted Feb 15th 2008 8:40AM by Douglas McIntyre
Filed under: Forecasts, Bad News, Citigroup Inc. (C)

A number of investors have tried to take money out of a hedge fund operated by Citigourp (NYSE: C). The fund make investments in corporate bonds. According to The Wall Street Jounal (subscription required), the bank "suspended redemptions in CSO Partners, a fund specializing in corporate debt, after investors tried to yank more than 30% of the fund's roughly $500 million in assets." Citigroup has had to put $100 million into the unit.

While the problem with this hedge fund is fairly modest in financial terms, it raises the question of how many other hedge funds the company may have to bail out. Does the bank have to put in another $1 billion to rescue these operations if they run into trouble? Or, could the number be larger than that.

Citigroup already faces skeptical investors who want to know how much more the bank may have to write-down for subprime mortgage instruments this year. Now Wall Street has the additional anxiety of problems at the company's hedge funds.

Douglas A. McIntyre is an editor at 247wallst.com.

Tags: c, CSO Partners, CsoPartners, hedge funds, HedgeFunds, inthenews

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Reader Comments (Page 1 of 1)

2-15-2008 @ 9:29AM

alan said...

Can't wait until all of the crap, hair-brained, rationalized investments are finally unwound at Citi.

When the smoke clears and all losses have been realized, Citi will be an $18-$22 stock.

More importantly, they need to flesh out these people and tell them adios. Only then will Citi have an opportunity to rebuild its credibilty in the market.

2-15-2008 @ 12:56PM

mac said...

we keep seeing little teeny tiny tips of the icebergs.
only the big boys have fessed up to $6
to $13 billion at a crack. the others just do not have the bal sheet wherewithal and are praying for a miracle which the fed is trying to provide.

unfortunately, it isn't going to work. interest rates could go to zero, and this devalued/tainted paper will not clear at any price or prices so ugly it will be game over.

there are likely thousands of these icebergs
from $100 mil to $10 bil.