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 It's been roughly four months since Cerberus Capital Management LP's contrarian bets on Chrysler LLC and GMAC LLC were wiped out, but the distressed investing specialist is still feeling the hangover from the high-profile bankruptcy and bailout as investors flee its hedge funds.Cerberus' family of hedge funds are hemorrhaging cash as clients have withdrawn over $4.77 billion, over 70% of the funds' assets sources, told The Wall Street Journal. The wave of withdrawals is part of a larger tidal wave slamming the asset class, which saw nearly $103 billion in redemptions in the first quarter, according to Hedge Fund Research Inc. Further, in March a Deutsche Bank AG (NYSE:DB) survey predicted that hedge funds could see a crushing $200 billion in withdrawals in 2009. Cerberus' "run on the bank" was prompted by investors' general need for cash and a fear that the firm might have lost its Midas touch for distressed investing in the current economy, after its primary hedge fund -- Cerberus Partners -- lost 24.5% in 2008, according to the WSJ. The fund is up about 3% in 2009. Cerberus hasn't taken the slew of withdrawal requests lying down and refused to return cash, saying that weak market conditions would mean low prices if it sold holdings. However, it has begun a restructuring plan that allows investors to leave the fund by transferring to a new fund with longer lockups but lower fees, the article said. - George White See WSJ story Hedge funds still can't stop the bleeding Hedge funds: $200B in withdrawals in '09? Also see: Hedge funds hold the line on fees
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