Another Hedge Fund Investing in Sub-Prime Paper Has Halted Redemption - The Market is Unraveling.

Unfortunately, this becoming normal. This article has a good summary of both Braddock Financial and United Capital, both hedge funds that have recently stopped redemptions of their funds. From the WSJ:

Investors received a letter earlier this week from Braddock Financial Corp. of Denver. It said it was closing its Galena Street Fund, which mainly invests in bonds backed by subprime mortgages extended to borrowers with poor credit, and suspending redemptions until it can sell assets in the roughly $300 million fund.

A year ago, the fund held about $400 million. But about $100 million seeped out as the value of subprime-related investments deteriorated and investors withdrew money, a Braddock official said.

The move is the latest sign of problems emerging from the subprime market in the U.S., the United Kingdom and elsewhere. Another high-profile hedge fund, United Capital Asset Management LLC, in Key Biscayne, Fla., has also stopped letting investors withdraw money from four hedge funds.

"We're going to see more problems at more firms; the unraveling process has started," (my emphasis) said Alan Fournier, who runs Pennant Capital Management, of Chatham, N.J., a hedge fund with $1 billion under management that has been betting on problems in the housing market.