Report: 3rd Bear Stearns fund in jeopardy
Hedge fund with $900 million in mortgage investments reportedly face huge losses, according to newspaper.
NEW YORK (CNNMoney.com) -- A Bear Stearns' hedge fund with about $900 million in mortgage investments is reportedly facing huge losses and is refusing to return investors' money, according to a news report published online Tuesday.
Revelations of the imperiled hedge fund comes weeks after the investment bank closed two hedge funds that suffered losses arising from the subprime-mortgage market.
The value of the Bear Stearns Asset-Backed Securities Fund has fallen amid a flurry of mortgage markdowns, the Wall Street Journal reported, sparking fears the bank will have to close the fund as it has done to two others.
The asset-backed fund's value was up 5 percent from Jan.1 to the end of June, the source told the newspaper. The troubled fund reported holds a range of mortgages with only a sliver being of the subprime category, the Journal reported.
Subprime loans are loans made to borrowers with less-than-perfect credit. Such loans have been roiling markets, setting off fears of a credit crunch or market slowdown in recent weeks.