PIMA, BlackRock, Drake, Fannie Mae, ALL INTERTWINED!!

Drake lost much of its money last year from bad bets on U.S. Treasuries, as well as Japanese bonds and stocks in developed markets, according to a year-end report sent to investors. It had borrowed about $12 for every $1 of net assets as of Dec. 31.

March 12 (Bloomberg) -- Drake Management LLC, the New York based-firm started by former BlackRock Inc. money managers, may shut its largest hedge fund, while GO Capital Asset Management BV blocked clients from withdrawing cash from one of its funds.

Drake told investors today that it would either liquidate its $3 billion Global Opportunities fund, continue to restrict redemptions or allow clients to shift assets to a new fund. Separately, Amsterdam-based GO Capital prevented customers from taking money out of its $880 million Global Opportunities Fund, saying in a March 11 letter that ``current market circumstances don't allow the fund to sell investments at a reasonable price.''

At least a dozen hedge funds have closed, sold assets or sought fresh capital in the past month as banks and securities firms tightened lending standards. The industry is reeling from its worst crisis because bankers -- staggered by almost $190 billion of asset writedowns and credit losses caused by the collapse of the subprime-mortgage market -- are raising borrowing rates and demanding extra collateral for loans.

``It would seem more probable that the market disruptions we have experienced will not abate in the short term, but will instead continue for some time,'' Drake wrote today in an 11- page letter to investors.

Drake, founded in 2001 by Anthony Faillace and Steve Luttrell, who both previously worked at New York-based BlackRock and Pacific Investment Management Co. in Newport Beach, California, blocked most redemptions in December after the fund declined 25 percent last year. Drake oversaw about $13 billion in total for clients at the end of 2007.

Drake lost much of its money last year from bad bets on U.S. Treasuries, as well as Japanese bonds and stocks in developed markets, according to a year-end report sent to investors. It had borrowed about $12 for every $1 of net assets as of Dec. 31.

In the letter to investors, Drake said one of the options it's reviewing is allowing investors to redeem all or part of their holdings in existing funds and move the assets to a new fund. The other alternatives are winding down Global Opportunities or limiting redemptions for the foreseeable future.

Global Opportunities investors who choose to go to the new fund could opt for two share classes. In the first, investors would pay fees of 1.5 percent of assets and 20 percent of profits and would agree to stay in the fund for a year, although they could exit earlier by paying a penalty of as much as 10 percent.

Investors in the second class, which would charge fees of 1.5 percent of assets and 15 percent of gains, wouldn't have the option of redeeming early. Drake would have to make up investors' losses from the previous fund before charging performance fees.

Hedge funds with more than $5.4 billion have been forced to liquidate or sell assets since Feb. 15 as contagion from the U.S. subprime slump spreads. Others include Peloton Partners LLP's $1.8 billion ABS Fund, Tequesta Capital Advisor's mortgage fund and Focus Capital Investors LLC, which invested in midsize Swiss companies.

The funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.

To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Tom Cahill in London at tcahill@bloomberg.net;

Dec. 28 (Bloomberg) -- Drake Management LLC suspended most redemptions from its largest hedge fund after losing 23.7 percent through November, according to a letter sent to investors of the New York-based firm.

Drake will meet about 25 percent of requested withdrawals from its $3 billion Global Opportunities Fund, which tries to profit from macroeconomic trends by trading bonds, stocks, currencies and commodities. The letter didn't disclose how much investors had asked to withdraw at the end of the year.

``This decision was made only after we attempted to convince redeeming investors to voluntarily rescind their redemption requests,'' said the letter, signed by Drake Management and sent out today.

The partial redemptions were made possible by an agreement with Drake's banks, the letter said. The firm's lenders would have been allowed to terminate transactions and seize collateral if net assets had fallen by 30 percent.

Drake was founded in May 2001 by Anthony Faillace, chief investment officer, and Steve Luttrell, chief operating officer, who both previously worked at New York-based BlackRock Inc. and Pacific Investment Management Co. of Newport Beach, California. The firm manages about $13 billion, including traditional bond funds.

Redemption policies for the firm's other funds are unchanged, the letter said. Faillace and Luttrell declined to comment through a spokesman.

The firm's assets more than doubled this year, after the Global Opportunities Fund advanced 41 percent in 2006. At the end of 2005, assets were $2.5 billion. This year Drake opened research offices in Miami, Sao Paulo and Istanbul.

The Global Opportunities Fund, managed by Faillace, has returned 13.4 percent a year on average since beginning trading on Nov. 30, 2002. That compares with a 13.1 percent gain by the CSFB/Tremont Global Macro Index.

Drake's $1.74 billion Absolute Return Fund, a multistrategy pool that primarily trades bonds, fell 11.5 percent this year through November. It has returned an average of 10.1 percent a year since inception on Dec. 31, 2001.

Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested.

To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net