United Capital Markets Holdings halted redemptions on some hedge funds within its Horizon Strategy group invested in subprime-mortgage bonds, reports Bloomberg News. “We did that as a defensive move because we had an unusually high number of redemption requests and we didn't want to be a forced seller in this market,” Michael Gregory, a spokesman for the Florida-based UCMH, said in a telephone interview with Bloomberg. One of the redemption requests came from an investor who had put up 25% of the funds’ money.
The decision to halt redemptions closely follows the devaluation of Bear Stearns’ High-Grade Structured Credit Strategies Fund and High-Grade Structured Credit Strategies Enhanced Leverage Fund, which also lost money as bonds backed by subprime mortgages plunged in value.
“People are very nervous about how deep the revaluations of these securities will have to go,” said Virginia Parker, who helps advise about $1.8 billion in client money at Parker Global Strategies in Stamford, Conn. “These positions didn't get marked down until June. Nobody's hand was forced in the market until then.”