Some Lehman hedge funds post losses in July

BOSTON (Reuters) - Lehman Brothers' LEH.N LibertyView hedge funds lost money in July, when tumbling financial markets left many hedge fund managers nursing their biggest declines of the year.

The LibertyView Special Opportunities Fund, which invests $214 million, declined 4.71 percent in July, slightly less than its 4.92 percent drop in June. For the year through the end of July, the fund was down 17.12 percent, according to a note to investors detailing the fund's performance. The note was obtained by Reuters.

A Lehman spokesman declined to comment.

The average U.S. hedge fund lost 3.5 percent in July, according to data from Hedge Fund Research, which is expected to soon release data on how the $1.9 trillion industry fared in August.

While hedge funds' July losses are less than the Standard & Poor's 500 stock index's 12.7 percent decline, the industry fell short of many managers' promises to make money in all markets.

So far this year, the LibertyView Special Opportunities Fund was in the black in only one month -- when it posted a 0.28 percent gain in April. The fund's managers said they faced difficult conditions in late spring and summer when most secured debt instruments weakened but the underlying stocks rallied.

"We can only look at the equity markets' recent stability and strength to provide some optimism that the relative valuation between two markets may soon find a better balance," the managers wrote in a note.

In total, LibertyView manages $1.8 billion in assets and is part of asset manager Neuberger Berman, which Lehman bought in 2003. Overall, Lehman's investment management division invests $277 billion. The investment bank is considering whether to sell some or all of its money management unit to help raise cash.

The group's largest fund, the $695 million LibertyView Plus Fund, slipped only 0.49 percent in July and is off 4.56 percent for the year through July. Its cousin, the LibertyView Leverage Plus Fund, lost 1.64 percent in July, putting it down 14.20 percent for the year through July.

The LibertyView Credit Opportunities Fund, which invests $451.4 million, lost 2.26 percent in July, bringing its loss for the year to 9.9 percent. The run-up in oil prices hurt the fund, and the drop in oil prices later did not help its positions, the fund managers said.

Since hedge funds are more loosely regulated than mutual funds, their performance numbers tend to be closely guarded, so any insight into a fund's performance is usually closely followed.

The following are performance figures for six LibertyView hedge funds and two other Lehman funds. Year-to-date is through the end of July. - LibertyView Plus Fund ($695 mln): down 0.49 pct for July; down 4.56 pct YTD. -LibertyView Leverage Plus (sister fund included in LibertyView Plus): down 1.64 pct for July; down 14.20 pct YTD. -LibertyView Special Opportunities ($214 mln): down 4.71 pct for July, down 17.12 pct YTD. -LibertyView Credit Opportunities ($451.4 mln): down 2.26 pct in July; down 9.90 pct YTD. -LibertyView Credit Select ($248 mln): down 2.57 pct for July; down 9.31 pct YTD. -LibertyView Convertible Arbitrage ($44.5 mln): down 3.63 pct for July; down 9.23 pct YTD. -Satori Technology Fund ($64.8 mln): down 2.78 pct for July, down 5.64 pct YTD. -Lehman Brothers GTAA Fund I ($208.5 mln): down 2.23 pct in July; down 1.14 pct YTD.

(Reporting by Svea Herbst-Bayliss; editing by John Wallace)