Galleon Funds to Unwind, Unloading Stocks
NEW YORK (TheStreet) -- Galleon Group, the hedge fund run by accused insider trader Raj Rajaratnam, will shut down and unwind its positions, according to a letter sent to its investors Wednesday.
The fund manages in the neighborhood of $3.7 billion and has been beset in recent days by clients wanting to withdraw their money (according to
The Wall Street Journal
, about $1.3 billion).
Galleon's letter to its clients, obtained by several news organs Wednesday, called the liquidation an "an orderly wind down." The letter also said Galleon would look into "various alternatives for its business."
Rajaratnam, meanwhile, has denied any wrongdoing, saying in the letter that he is "innocent of all charges."
Raj Rajaratnam, billionaire founder of the Galleon Group, a major hedge fund, is led in handcuffs from FBI headquarters. |
Because most of the fund's stakes are in highly liquid assets, Rajaratnam wrote in the letter, converting those stakes to cash shouldn't pose a problem.
Still, at least some stocks -- the more lightly traded ones -- could take a hit in the Galleon sell-off. Already, the shares of chipmaker
Anadigics
(ANAD)
may have taken a dive on news of the Galleon unwinding, according to Galleon traders who spoke to
Journal
reporters (the fund owns some 1.2 million Anadigics shares.) The stock declined in price on Monday and Tuesday, but was rebounding sharply in Wednesday's session, climbing nearly 6% to $4.35.
Some of Galleon's traders believe that competing players will short some stocks in a bid to profit as the fund unloads its positions, the
Journal
said.
Galleon's traders conduct some 1,000 trades a day, and its positions sprawl over many asset classes, including bonds, options and ETFs.
According to the fund's latest disclosure to the
Securities and Exchange Commission
, some of its top common-share holdings, as of the end of the June, include:
Apple : 416,491 shares
Bank of America : 2,483,500 shares
Biogen Idec : 268,537 shares
Cisco : 1,608,307 shares
Dell : 2,082,373 shares
EBay : 4,740,000 shares
EMC : 1,649,404 shares
First Solar : 125,000 shares
Google : 140,800 shares
Intel : 1,144,500 shares
JPMorgan : 909,845 shares
MEMC : 1,182,604 shares
Nvidia : 1,915,195 shares
OSI Pharmaceuticals : 1,647,633 shares
Palm : 162,450 shares
Pepsi Bottling : 622,500 shares
Verisign : 1,090,978 shares
Yahoo : 1,288,298 shares
-- Written by Scott Eden in New York
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