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July 29, 2016 at 06:13 AM
Third Avenue Management is considering the sale of its Focused Credit Fund, which halted redemptions in December and spurred a selloff in the high-yield market, according to a person familiar with the matter.
Investment bank Houlihan Lokey Inc. is looking for a buyer for the mutual fund, which has assets of about $603 million, said the person, who asked not to be named because the matter isn’t public. The Wall Street Journal reported the possible sale earlier Thursday.
Third Avenue, which was founded by value investor Marty Whitman, shuttered the fund in December after losses and withdrawals left it unable to meet redemptions without selling assets at fire-sale prices. News of Third Avenue’s lock-up triggered a brief selloff in high-yield bonds and stock markets as fears grew that a collapse in the speculative-grade market could cause a global contagion.
High-yield bonds have rallied since February on signs that the U.S. economy is still growing a moderate pace.
The Third Avenue fund, which had almost $3.5 billion in assets in 2014, according to data compiled by Bloomberg, had less than $800 million when it was closed in December. The firm’s chief executive officer, David Barse, was dismissed soon after the fund shut down.
