Highland Shuts Two Funds Amid 'Unprecedented' Disruption In The Financial Markets
Highland Capital Management LP will close its flagship Highland Crusader Fund and another hedge fund (Highland Credit Strategies fund) after losses on high-yield, high-risk loans and other types of debt, according to a person familiar with the situation. These two hedge funds have combined assets of approximately $1.5 billion.
Highland's AUM (assets-under-management) have dropped from $40 billion to $33 billion. Bloomberg obtained a letter from Highland to investors that said the Highland Credit Strategies fund suffered from "unprecedented market volatility and disruption'' in financial markets.
Highland was the world's largest non-bank buyer of high-risk, high-yield loans last year, also manages collateralized loan obligations and in March raised $1 billion to buy distressed loans. Reportedly, Highland plans to sell 20% of the Highland Credit Strategies Fund's assets in the next 6 months and a further 20% in the following 6 months.
The letter also said, "The environment is one where the fundamental tools to manage the Credit Strategies funds' trading, hedging, shorting and financing are highly constrained, and in some cases unavailable."
Bloomberg reported the Crusader fund is down more than 30% this year.
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