September 30, 2006

Pirate in a Sea of Troubles

When it rains, it pours! And what a downpour Pirate Capital’s having. Close on the heels of the Connecticut-based hedge fund losing half its investment team comes the bad news that it is being investigated by the U.S. Securities and Exchange Commission (SEC) on suspicion of failing to alert the commission when it was selling stock.

In an attempt to recoup losses, founder and portfolio manager Thomas Hudson stated in a letter that the fund would not accept new investors and would rather concentrate on delivering returns than on garnering more money.

The activist fund has not a stellar year with its main fund, the Jolly Roger up by only 3.3 percent and its activist fund up 2.86 percent – both figures well below the norm for activist funds, according to Hedge Fund Research in Chicago.

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