Goldman Sachs Global Equity Fund Gets 3 Billion Dollar Bailout
Goldman Sachs on Monday announced that they would be sinking $2 billion dollars of their own money into the deeply troubled Global Equity Opportunities Fund, after the fund reported a 28% decline just in August. Following the lead of many other funds, the stock has tumbled in the early days of August as a "perfect storm" has formed, damaging the portfolios of many hedge funds. The other billion dollars comes from "Hank" Greenberg, former chairman of AIG, and billionaire Eli Broad.
The Global Equity Opportunities Fund was another quant fund that was absolutely taken apart over the past week or two. Luckily for this fund, there are some deep pockets willing to invest, as the fund has reported that assets dropped by $1.4 billion dollars to $3.6 billion dollars total in just the past week.
The cash infusion was also meant to shore up confidence in the fund, as Goldman Sachs wanted to avoid investors redeeming their money, as that would cause the fund to have to liquidate more positions at rock bottom prices. Investors in the Global Equity Fund can redeem their money with just 15 days notice, so Goldman needed to act quickly to infuse more capital into the fund.
The fund said that it plans to continue to use the same amount of leverage as before, unlike some other funds which are going to be reducing the amount of leverage that they use. Goldman has said that it has confidence in the computer driven models that drive the fund.
Filed under: Hedge Fund News | The Economic Meltdown | General Market News