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Devaney Shutting Down Hedge Funds: No Equity Remaining

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John Devaney's Horizon hedge funds failed to meet margin calls from Deutsche Bank and now is in the process of being liquidated. Deutsche Bank seized and auctioned off collateral, Devaney revealed yesterday in a letter to clients obtained by Bloomberg. The Horizon funds had held most of assets under management by Devaney's United Capital Management company. Last July Delaney suspended redemptions in the funds in an effort to avoid a fire sale of assets.
Devaney's strategy was to buy subprime-mortgage bonds and other asset-backed securities when the market turns against them, selling them later when they come back into favor. Devaney profited from buying suddenly unfashionable asset-backed bonds after the 1998 collapse of hedge fund Long-Term Capital Management. But markets can sometimes remain unfashionable longer than hedge funds remain solvent.

Devaney's Funds Wiped Out After United Capital Gets Margin Call

[Editor's note: An earlier version of this item misspelled Devaney's name, replacing it with the name of a grade school teacher at St. Joseph's Elementary School. Our apologies.]


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