Investments Guilty By Subprime Association

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The latest fund to go under from subprime worries is the $300mm Galena Street Fund managed by the Braddock Financial Corporation. The fund wasn’t exactly tanking, and lost just 3% in Q1 of this year, after gaining a modest 7% last year. Ok, so it really wasn’t doing much of anything, which had investors a bit on edge (the ole, “things are too quiet,” axiom). It turns out investors were just nervous that the fund was exposed to subprime investments and started ramping up liquidation requests. Braddock CEO Harvey Allon thinks the whole thing was a setup, but decided to acquiesce to investor votes and shut Galena down.
Braddock will initiate the first phase of Galena’s full capital return by issuing 20% of investor balances next week.
Manager to Liquidate Fund After Heavy Redemptions [New York Times]

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