Posted On:
March 28, 2008
Another Hedge Fund Falters
Carrington Capital Management, LLC, a $1 billion hedge fund, is looking for a few good investors. The fund, which specializes in mortgages, is asking investors to lend it as much as $200 million with an 18 percent interest rate on new preferred shares.
Carrington is raising the money to replace bank loans but maintains that its relationship with traditional lenders Citigroup and JP Morgan Chase remains “good.”
How good can the bank relationships be when you have to pay investors 18% interest to borrow money? The hedge fund’s inability to obtain credit from its traditional lenders and the high rate of interest it is being required to offer in its efforts to raise capital indicate a “rocky road ahead.’
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