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How Are the Mighty Brought Low!


George Soros Cashes Out


Fear of redemptions and/or fear of the markets.

George Soros, the legendary hedge fund investor, has liquidated the majority
of assets in his flagship fund.

More than 80 per cent of Quantum Fund's $7bn in assets has been converted to
cash, according to people familiar with the its activities.

The size of the shift has kicked up speculation that Mr Soros may be
preparing for a larger wave of investor redemptions than previously
acknowledged after his move to re-make his funds along more conservative
lines.

Suspicions were raised because the amount of assets liquidated was roughly
double the $3bn that Mr Soros recently predicted disenchanted investors would
be likely to withdraw as a result of the restructuring.

Soros Fund Management refused to comment on the matter on Monday.

However, some observers said it was also likely that some of the cash had
accumulated as a consequence of the change in strategy, where the firm has
closed out risky positions and not yet replaced them with the more secure
investments it will now favour.

Mr Soros' effectively exited the large-scale hedge fund business earlier this
year, after his funds suffered heavy losses from a downturn in technology
shares.

In April, he sent a letter to investors informing them that Quantum and
Quota, its two largest funds, would be reduced in size, and would seek less
risky investments.

After Quantum averaged 30 per cent annual returns for more than 30 years, Mr
Soros said he would be happy to achieve just half that in order to fund his
charitable interests.

Stanley Druckenmiller and Nick Roditi, the prominent managers who ran the
funds, left Soros as part of the restructuring.

Those changes are not believed to have sat well with investors in the fund,
who had signed with Soros seeking lavish returns from its prominent cast.

"This has all the ingredients of a big outflow," a hedge fund industry
consultant said. "People don't invest in a brand name, and all the
identifiable talent has admitted to not having their hands on the money
anymore, so I wouldn't be surprised if the redemptions were a lot higher
[than $3bn]."

The Financial Times, May 16, 2000

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