Litowitz's Magnetar is the Next Fund to Limit Client Withdrawals

According to a recent Bloomberg report, Magnetar Capital has been added to the growing list of hedge funds which have limited their clients withdrawals following the unprecedented action in the markets this year.

The firm, co-managed by former Citadel trader, Alec Litowitz, informed it's clients on December 18 that limitations, known as "gates", on withdrawals were being enacted because clients had attempted to pull more than 15% of the capital in its $4.8 billion multistrategy fund out. Specifically, the Dec. 18 letter told clients of Magnetar's multistrategy fund that if they had asked for redemptions by December 31, they could receive 10% of their requests in cash with about 5% in shares of its two credit funds.

As this is certainly not the first hedge fund to limit its withdrawals, many investors are expecting more funds to announce similar precautions before year-end. While this remains to be seen, it will be interesting to see how limiting withdrawals affects money-managers window-dressing actions.

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