Gotham Partners Closing Two Funds

The $300 million Gotham Partners Management is in the process of closing two of its principal investment funds, in part because of its investment in a financially troubled golf course, Gotham Golf Corp. Gotham is shuttering two funds that mainly invest in non-publicly traded companies and real estate concerns.

The hedge fund took the action after a New York State court blocked the merger of Gotham Golf with First Union Real Estate Equity and Mortgage Investments. The court ruling could force Gotham Golf to file for bankruptcy protection.

Gotham officials were not available for comment.

Gotham is a 10-year old hedge fund that has become well-known for publishing its own research reports on stocks in which it has taken either a long or short position.

Recently, Gotham had taken a bullish stand on shares of Pre-Paid Legal Services(PPD Quote), a controversial company that markets and sells plans to provide people with legal coverage for minor offenses. Gotham published a research report touting Pre-Paid's stock on its Web site and in an article on TheStreet.com, which has published a number of critical stories about Pre-Paid's management.

But Gotham found itself in controversy shortly after it adopted the bullish tone on Gotham. A Dec. 22 article in The New York Times examined the fund's trading in Pre-Paid shares and noted that it sold 200,000 of its 1 million shares in the company around that time.