Stone Lion halts redemptions from $400m credit fund
A gloomy bookend to a gloomy day for the credit markets, news that the hedge fund group Stone Lion Capital Partners is barring redemptions from a $400m credit fund.
The decision to put up gates comes after the firm received what it calls “substantial” redemption requests, reports Stephen Foley.
The message from Stone Lion to its investors is that they will be better off if it does not have to dump positions on to the market quickly, after months of weakening prices and growing concerns about illiquidity in the credit markets.
Here’s the public statement confirming it has put up gates on its $400m Stone Lion Portfolio fund, the firm’s oldest fund:
Stone Lion Capital Partners manages approximately $1.3bn of assets under management. After receiving substantial redemption requests in Stone Lion Portfolio, Stone Lion concluded to suspend redemptions in the fund to ensure fair and equitable treatment for all of the fund’s investors.
New York-based Stone Lion is run by former Bear Stearns high-yield bond traders Gregory Hanley and Alan Mintz.
The return of gates in the hedge fund industry will unnerve investors, who were infuriated by their use during the credit crisis last decade.
The news comes after Third Avenue on Thursday shut a high-yield mutual fund, putting up gates on a fund available to retail investors and sold as offering daily redemption options. Third Avenue’s move caused a sharp selloff in high-yield on Friday.