The Hedge Fund Graveyard of 2006

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The results are in and there can be little doubt: last year was the deadliest in recent memory for the hedge fund industry. At least eighty-three hedge funds shut down in 2006, according to a study released on Monday by industry newsletter Absolute Return. All told the failed funds managed at least $35 billion.
But what really caught our eye was that 2006 saw at least nine hedge funds which once managed over $1 billion go under. Leading the back was Amaranth, of course, which once managed $9.1 billion. Other casualties included a fund run by Archeus Capital Management's which managed $2.65 billion when it was at the top of its game; a Sagamore Hill Capital fund, which ran up to $2.6 billion; and Saranac Capital's Citigroup Multistrategy Arbitrage/Saranac Arbitrage fund, which once had $2.2 billion under management. Last year no funds controlling over $1 billion went under, according to Absolute Return. This year, funds with over $1 billion accounted for the majority of the $35 billion casualty number.
In terms of the raw number of funds collapsing, of course, the majority of the 84 far smaller firms, nearly half of them never having more than $50 million in assets. Absolute Return tells us that this "suggests the $1.4 trillion industry is evolving into a business dominated by the bigger firms."
Hedge funds with $35B shut in '06 [Associated Press in Business Week]

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