Sowood Makes Citadel Look Good

Posted by Bess Levin, Jul 30, 2007, 4:11pm

Sowood Capital, blistered by big losses in its bond portfolio resulting from the current state of affairs in subprime mortgages and karma for Harvard being one of its biggest investors, voluntarily left the credit business today, after being asked to leave. The erstwhile multi-strategy fund, founded by Jeffrey Larson, sold its credit positions to Citadel, which now controls the “majority” of Sowood’s positions. Citadel manager Ken Griffin said in a statement this morning that his people “appreciate the professional manner in which the Sowood team has handled this complex transaction from start to finish.” Because when you’ve just completed the “transaction” of organ-harvesting, it’s nice to be gracious about it.

Sowood Unloads Credit Portfolio On Citadel [FINalternatives]

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Posted in: Citadel, Hedge Funds

Comments

Posted by jt, Jul 30, 2007 4:20PM

wasn't sowood (btw could they have a gayer name?) only down like 10-15% ytd? That isn't exactly catastrophic and alone wooldn't seem to warrant a fire sale, no?

Posted by Wootenany, Jul 30, 2007 4:24PM

Yeah, but how heavily were they leveraged, jt?

Posted by PBateman, Jul 30, 2007 4:25PM

The current rumor we've heard circulating is that the fund is down about 50%.

Posted by jt, Jul 30, 2007 4:32PM

ok 50% probably wooda done it. Where'd you see that # bateman coulda sworn the (at least initial) stuff I've seen was far lower, but as wootenany mentioned they were probably significantly leveraged thus multiplying any initially-reported losses.

Anyone wanna get together on that firesale of that yacht of his? Could throw one helluva party on that rig, maybe rename it "F-CK You" Money or something obnoxious like that

Posted by BostonGuy, Jul 30, 2007 4:39PM

I work on the floor below Sowood in Boston. Rumor right now is that they let 70 people go this morning...

Posted by PBateman, Jul 30, 2007 4:43PM

Number isn't published, just a rumor we've heard circulating. When you run a 7x levered loan book, it doesn't take much of a sell off to produce those kind of losses.

Posted by BostonGuy, Jul 30, 2007 4:47PM

Also, "Sowood" is derived from the name of the street that Larson used to live on in Wellesley when he started at Harvard Mgmt way back when. Just a response to the first poster (but I do agree, not a very cool name).

Posted by , Jul 30, 2007 4:51PM

heard they lose money on debt/equity plays and credit skew trades.

any idea how big of a portfolio they handed off to citadel?

Posted by BostonGuy, Jul 30, 2007 4:55PM

Last time I heard, it was approx. $3B.

and I think Harvard had close to $500MM in it?

Posted by Rahodeb, Jul 30, 2007 4:55PM

They should have just been long WFMI.

Posted by joe, Jul 30, 2007 5:02PM

Can someone help me out? their 3/31 13-F shows about 6.5B in equity and options, the vast majority of which were puts. To be down even 50%, the credit portfolio had to be large and almost completely wiped out. Any insight into what happened?

Posted by , Jul 30, 2007 5:03PM

they are not the only ones sitting on skew losses -- the indices whipped around so much compared to constituents last week -- people have been putting that index arb play and scooping up free money for months - now its moved

some have moved back in today, last hour and a half credit picked up dramatically but last week heard rumors of significant losses

Posted by , Jul 30, 2007 5:04PM

they are not the only ones sitting on skew losses -- the indices whipped around so much compared to constituents last week -- people have been putting that index arb play and scooping up free money for months - now its moved

some have moved back in today, last hour and a half credit picked up dramatically but last week heard rumors of significant losses

Posted by , Jul 30, 2007 5:05PM

they are not the only ones sitting on skew losses -- the indices whipped around so much compared to constituents last week -- people have been putting that index arb play and scooping up free money for months - now its moved

some have moved back in today, last hour and a half credit picked up dramatically but last week heard rumors of significant losses

Posted by chris, Jul 30, 2007 5:24PM

triple posting bastard!!!

Posted by , Jul 30, 2007 6:45PM

They should have just been long WFMI.

Posted by: Rahodeb | July 30, 2007 04:55 PM

LOVE IT

Posted by Billy Sol Skilling, Jul 31, 2007 2:11PM

"Skew"? As in "Git up Ricky Ron, you gonna be late fer skew!"

That's where they hold grades 1 through 9 ain't it? At least in Deep East Texas it is. Don't rightly know myself.

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