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And Another: Junk Bond Fund Run By Clintons' Close Personal Friend Slammed With Heavy Redemptions

Tyler Durden's picture




 

It may not be a mutual fund like Third Avenue, but Marc Lasry's Avenue Capital Group hedge fund is far more prominent in the investing community, and as such news that it too has been slammed with redemptions from its high yields fund in recent weeks will hardly ease fears about a capital outflow from the junk bond which has sent junk ETFs down 12% for the year and has become the main topic of discussion over the past week following a flurry of reports about panic among holders of below-investment grade bonds.

What is just as surprising is that among its investments, Lasry does have a mutual fund, in fact two of them - the Avenue Credit Strategies Funds, an open- and close-ended fund, which as we first showed last Friday using the following Morningstar table, are not only among the worst performers year to date, but have tumbled by a whopping 9% in the past three months.

 

Fast forward to last night when according to Reuters, Avenue's founder, billionaire Marc Lasry, was forced on Monday to back the junk bond mutual fund hemorrhaging assets at his Avenue Capital Group "as jittery investors exit high-yield bonds amid a market rout."As a result, the size of the fund has been cut by more than half, sliding from $2 billion to just $884 million according to Lipper, roughly the same size where Third Avenue's own high yield fund was when it announced it would liquidate and gate investors.

Despite his defensive posture, Lasry hardly sounded too enthusiastic about the pace of outflows: "I think overall redemptions at some point are going to slow down across the market," Lasry said. "I'm not sure if that will be tomorrow or next week, but people are going to start putting money back into the market at some point."

The reason for the sudden redemption wave is not only the overall weakness among junk bonds, but as Reuters notes, investors have taken note that Lasry's $884 million Avenue Credit Strategies Fund is run by the same portfolio manager who in 2009 helped launch the Third Avenue Focused Credit Fund, which abruptly shut down last week and blocked investor redemptions, fund disclosures show.

In January 2012, Jeff Gary joined Lasry from Third Avenue, where he once ran the now defunct fund. Gary left Third Avenue in December 2010.

Cornered, Lasry had to show the "distinctions" between the two junk bonds in a telephone interview with Reuters, saying that Third Avenue's fund had an estimated 20 percent of its assets in illiquid, hard-to-trade securities.

“We have a diversified and well-positioned portfolio and our illiquid assets are in the single digits,” Lasry said about his fund. Lasry's Avenue Capital, has about $12 billion in assets, compared with less than $10 billion at Third Avenue Capital.

The Avenue Credit Strategies Fund's total return is minus 10 percent this year, underperforming the 3.83 percent average decline in the junk bond category, according to Morningstar Inc. And investor withdrawals have accelerated since March, cutting the size of the fund from $2 billion to $884 million, according to Lipper Inc.

 

By contrast, Third Avenue's junk fund was down nearly 30 percent before it closed with about $800 million in assets. Both funds bet on debt issued by companies in stressed situations. Third Avenue, though, focused some of its investing on bankruptcy-related claims, which are considered extremely hard to trade even during good times.

Despite his spirited defense, Lasry's work may be cut out for him: Brad Alford, chief investment officer of Alpha Capital Management in Atlanta, who had invested in both the Avenue Capital and Third Avenue funds, said Third Avenue's liquidation shocked the mutual fund industry. Alford sold out of both the Third Avenue and the Avenue Capital funds earlier this year.

"It has shaken to me to the core. Who else can do this?" he said.

We may soon find out, because even with his attempt to sound optimistic, when redemption waves come, they rarely stops on a dime if at all, and there is only so much capital outflows a fund, mutual or hedge, can take before it is forced to take a time out, either temporary or permanent. Avenue will be no different.

The only question is whether Lasry, who is a close personal friend of the Clintons - recall Chelsea Clinton launched her "career' by working as an "analyst" at the very same Avenue Capital in the mid-2000s - and who was slated to become US ambassador to France until his ties to a shady poker ring were exposed in 2013, will use his executive privilege and request special treatment by the former, and soon future, first family. 

If so, that will be the first case of a hedge fund bailout by the presidential family in history, and will make the political farce that are US capital markets even more comical.

 

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Tue, 12/15/2015 - 08:41 | 6925103 Wow72
Wow72's picture

Good your a fucking idiot if you give your money to these crooks!  Or wait maybe your a crook yourself?  The Brand seems to be wearing thin?

Tue, 12/15/2015 - 08:35 | 6925109 wmbz
wmbz's picture

Who's the horse faced slob in the picture above.

Looks like a cross between the Hildabeast and Janet" Shaky"Reno

Tue, 12/15/2015 - 08:42 | 6925123 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Maybe that other horse face banged Hillary?

Tue, 12/15/2015 - 09:05 | 6925151 Jerky Miester
Jerky Miester's picture

Webster Quasimodo Hubble and Cankle Monster had an affair.  That ugly creature is the result.

Tue, 12/15/2015 - 09:17 | 6925176 Niall Of The Ni...
Niall Of The Nine Hostages's picture

If her mother has anything to do with it, by 2033 you'll be calling her Madam President. 

God help us all.

 

Tue, 12/15/2015 - 08:41 | 6925118 overmedicatedun...
overmedicatedundersexed's picture

the drug cartels done washed dat money and got out.

Tue, 12/15/2015 - 08:42 | 6925119 Bill of Rights
Bill of Rights's picture

Who is funding your Candidate?

http://i.imgur.com/sRUouxQ.jpg

Tue, 12/15/2015 - 08:43 | 6925124 Cangaroo.TNT
Cangaroo.TNT's picture

Our illiquid assets are in the single digits.  The first digit is a "2", and the second is a "7".

 


Tue, 12/15/2015 - 08:45 | 6925126 ToSoft4Truth
ToSoft4Truth's picture

If a bailout is required, they’ll get the bailout.

That’s how Team-America works. 

Tue, 12/15/2015 - 08:58 | 6925138 youngman
youngman's picture

This has only been front page news for a week...people are still on the sidelines but will soon run for the exits as they understand the risks involved...more down to go

Tue, 12/15/2015 - 08:59 | 6925139 fiftybagger
fiftybagger's picture

Couldn't happen to a nicer bunch.

Snicker

Tue, 12/15/2015 - 09:15 | 6925173 Cautiously Pess...
Cautiously Pessimistic's picture

Not to worry. Pantsuit Cankles still has some pull at the State Department.  She can 'pull some strings' and help her old friend out.  Hang tight Mr. Lasry, the calvary is on the way.  Just like she sent the calvary into Benghazi to stop the.... oh wait, nevermind.

Tue, 12/15/2015 - 10:51 | 6925567 Hubbs
Hubbs's picture

Canklesuit Clinton

Tue, 12/15/2015 - 09:20 | 6925185 youngman
youngman's picture

He is going to be on CNBC Friday...if he still is a fund manager by then

Tue, 12/15/2015 - 09:21 | 6925188 christiangustafson
christiangustafson's picture

I thought Janet Reno was the father.

Tue, 12/15/2015 - 09:23 | 6925195 yogibear
yogibear's picture

Chelsea Clinton is a combo of Bill and Hillary.

She's an attorney and so full of it like Slick-willy and is a bitch like Hillary.

She's following the family line of shady deals.



Tue, 12/15/2015 - 09:31 | 6925221 dizzyfingers
dizzyfingers's picture

She married into Wall Street. All the right moves...

Tue, 12/15/2015 - 13:24 | 6926352 Lucky Leprachaun
Lucky Leprachaun's picture

And to one of the Tribe....

Tue, 12/15/2015 - 12:24 | 6926108 Dorothea Binz
Dorothea Binz's picture

Chelsea is not an attorney. But she does have a doctorate in Philosophy for whatever that's worth. 

Tue, 12/15/2015 - 09:24 | 6925201 Dragon HAwk
Dragon HAwk's picture

Face made for a ball Gag..

  Hey Bill Wana watch...

Tue, 12/15/2015 - 09:24 | 6925203 strangeglove
strangeglove's picture

Wait back up here a bit please.

A Bond can go down in price?

Tue, 12/15/2015 - 09:27 | 6925212 Hubbs
Hubbs's picture

Hill -da -bitch  will use every means at her disposal to make sure her network of cronies is preserved, starting with her son-in-law, so that when she becomes president, she has the means to rape the country financially. 

 

I expect she  winds up  a multibillonaire by the time she leaves office. 

Tue, 12/15/2015 - 10:37 | 6925478 SmedleyButlersGhost
SmedleyButlersGhost's picture

Rape ? I think 'star at the orgy' is more like it. (That image fully qualifies as birth control). They obviously don't need the Presidency to get and keep the money rolling into the 'Foundation'. Presidency is just the ego ride for these self absorbed assholes because POTUS is a puppet/muppet.

Tue, 12/15/2015 - 09:27 | 6925215 SMC
SMC's picture

Reality does not care about how “connected” you are or how much “paper” you have.

Tue, 12/15/2015 - 09:48 | 6925269 Niall Of The Ni...
Niall Of The Nine Hostages's picture

Don't be silly. The Clintons have no friends, just business partners. In their world, friends are for losers who can't afford to liquidate people who welsh on a contract. 

One day we'll find out what Vince Foster did or didn't do that convinced Hillary to whack him. 

Tue, 12/15/2015 - 10:14 | 6925383 Wahooo
Wahooo's picture

Fucking grifters. They are the new world order carpetbaggers.

Tue, 12/15/2015 - 10:46 | 6925536 zipit
zipit's picture

Please post warning in title of post of it contains pic of Chelsea

Tue, 12/15/2015 - 10:46 | 6925537 GRDguy
GRDguy's picture

Anybody out there have any idea who really now owns the Las Vegas Review newspaper? I'm wondering if the secrecy is because a fund like this commentary can't come through with the money as promised.

http://www.nytimes.com/2015/12/15/business/media/reporters-in-las-vegas-...

Tue, 12/15/2015 - 16:28 | 6925810 Boxed Merlot
Boxed Merlot's picture

who really now owns the Las Vegas Review newspaper?...

 

This is pretty amusing when the investigative staff of a newspaper that claims to have significant political sway is unable to uncover who signs their checks, or spent a premium of 140M to edit the news that will be appearing on their pages.  Surely Biden can figure out who's on the Delaware Corporation's September request to incorporate, he’s got to have a few contacts left in the state.

“Investigative journalist”, you bet, I learn more from the comment section here than the drivel that passes for knowledge from the staged events and subsequent coordinated interpretations given by the collectors and protectors of the information that this sort of story should’ve been able to provide months ago before the sale was finalized.

Why all the secrecy?  Way to go 4th estate, you’re as useless as the other 3 branches. 

 

"He cuts off every branch in me that bears no fruit, while every branch that does bear fruit he prunes so that it will be even more fruitful"...John 15:2NIV

Evidently pruning may not be enough.

 

Jmf.

 

Tue, 12/15/2015 - 10:57 | 6925598 toncuz
toncuz's picture

As if the Clinton's have something to do with it. When did ZeroHedge become a shill for the Republican Party AKA "Wall Street's Boot-Lickers".

I guess you naive drips didn't know Mitt Romney's top ten contributors were ALL Wall Street banks.

I'll take the Clintons any day over the people responsible for nearly destroying the world's economy from sheer greed.

Wed, 12/16/2015 - 00:46 | 6929186 Blankenstein
Blankenstein's picture

Jamie Diamond, Lloyd Blankfein, Jon Corzine, etc.  all team blue

Obama and his team have ZERO Wall Street prosecutions for the 2008 meltdown 

 

And Goldman Sachs, JP Morgan and Citigroup were all top ten contributors to Obama in 2008  

 

As Senator, 4 of Hillary's top 5 donors were banks: CITIGROUP, GOLDMANS, JP MORGAN, and MORGAN STANLEY.

 

Team blue is just as responsible - get over it

Sat, 01/02/2016 - 02:07 | 6987340 toncuz
toncuz's picture

Utter nonsense. The financial crisis was entirely a Repulican fiasco. Bush and the GOP Congress were warned that SIXTY TRILLION in Credit Default Swaps were "financial weapons of mass destruction". They did exactly ZIP to regulate or stop it in any way. Housing was HARDLY to blame as only SIX percent of total loans were in default when the market imploded.

That's Republican philosophy...never interfere with their master's money. They are the ultimate boot-lickers. 

Tue, 12/15/2015 - 11:38 | 6925845 Big_bear
Big_bear's picture

Credit Suisse is big in Junk ..

 

According to data obtained by Yahoo Finance*, there are currently $27.2 billion in mutual fund assets that have suffered peak-to-valley losses over the last year greater than 10%. This amount is 35 times greater than the size of the Third Avenue fund, which suffered the third worse loss in the list of -34.5%.



 

View gallery

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List of mutual funds

The two greatest losses bear a common name, which dominates the list: Credit Suisse. Total assets of $15.9 billion are represented by Credit Suisse named funds, or 59% of the $27.2 billion total.

The largest fund in the list is Credit Suisse Institutional International, which has total assets of $9.9 billion. According to Morningstar, it is currently managed by American Funds.

 

When the time period of the analysis is extended to the peak of June 19, 2014, fund performance for the Credit Suisse named fund reflects a loss of -24.6%, which is roughly half of the -47.4% loss of the Third Avenue fund.

http://finance.yahoo.com/news/why-the-current-credit-crisis-might-be-35-...

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