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Portfolio > Alternative Investments > Hedge Funds

Hedge Fund Sentiment Prompts Concord Liquidation

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MEMPHIS, Tenn. (–Electronics company, Concord EFS Inc. is pulling the plug on two new proprietary hedge funds of funds worth US$150 million, after investors in the publicly listed company expressed concerns about what they perceive as risky nature of alternative investments, company officials said.

The company had just made the investment on July 1, according to Securities and Exchange Commission filings.

The Aug. 9 announcement follows news reports that the company was being investigated by the Securities and Exchange Commission, something the company denies. The rumors may have been triggered by an Internet message board posting, according to Dow Jones Business News.

In terms of its current hedge fund exposure, the Memphis-based firm said there wasn’t an actual problem in terms of performance of the funds of funds. However, the hedge fund investments would be liquidated in an orderly fashion over the next few months as a result of shareholder concerns about the inherent riskiness of such alternatives, company officials said.

“A relatively low percentage of our portfolio is in the fund of funds. The $150 million represented about 10% of our overall portfolio,” said Concord EPS spokesperson Melinda Mercurio. Advisers who advocate hedge fund investments as a diversification tool typically suggest institutional investors place between 5% and 15% of their portfolios in alternatives.

Because the two funds are in liquidation, the firm declined to release the name of the multi-manager vehicles or other specific details. It was also unclear if the “hedge funds” were pooled vehicles commingled with outside investors or whether they were instead run as separately managed accounts.


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