Icahn Returns $1.76 Billion to Investors

Icahn Returns $1.76 Billion to Investors in Case of ‘Another Market Crisis’

Wednesday, March 9, 2011 07:46 AM
Starting in April, outside investors in the funds will receive cash based on the value of investments as of March 31, according to the letter
Billionaire Carl Icahn will return all the money managed for outside investors in his hedge funds, ending a six-year experiment in which he sought to use their cash to gain influence over companies he targeted for change.

Icahn, who buys stakes in companies he considers to be underperforming and then pushes for change, cited concerns about the economy and unrest in the Middle East, according to a client letter filed Tuesday with the U.S. Securities and Exchange Commission. Investors had already withdrawn much of their capital from Icahn’s hedge funds, leaving just $1.76 billion of fee-paying assets in the $7 billion funds.

“While we are not forecasting renewed market dislocation, this possibility cannot be dismissed,” Icahn said in the letter. “Given the rapid market run-up over the past 2 years and our ongoing concerns about the economic outlook, and recent political tensions in the Middle East, I do not wish to be responsible to limited partners through another possible market crisis.”
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When the Big Guns become afraid; it sure makes me nervous! Personally I don’t see a melt-down until this fall. I see another dollar sloppy rally up to 85-87 and then CRASH.

Another dumps holdings today!
Gross Eliminates Government Debt From Pimco's Flagship Total Return Fund
By Susanne Walker - Mar 9, 2011
Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., eliminated government-related debt from his flagship fund last month as the U.S. projected record budget deficits.
Pimco’s $237 billion Total Return Fund last held zero government-related debt in January 2009. Gross had cut the holdings to 12 percent of assets in January, according to the Newport Beach, California-based company’s website. The fund’s net cash-and-equivalent position surged from 5 percent to 23 percent in February, the highest since May 2008.
Yields on Treasuries may be too low to sustain demand for U.S. government debt as the Federal Reserve approaches the end of its second round of quantitative easing, Gross wrote in a monthly investment outlook posted on Pimco’s website on March 2. Gross mentioned that Pimco may be a buyer of Treasuries if yields rise to attractive levels.
Treasury yields are about 150 basis points too low when viewed on a historical context and when compared with expected nominal gross domestic product growth of 5 percent, he wrote in the commentary. The Fed is scheduled to complete purchases of $600 billion of Treasuries in June.
Gross in his February commentary urged investors to reduce holdings of Treasuries and U.K. gilts and buy higher-returning securities such as debt from emerging-market nations. “Old- fashioned gilts and Treasury bonds may need to be ‘exorcised’ from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint,” Gross wrote.
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