February 26, 2009 / 5:54 PM / 11 years ago

UPDATE 1-Chanos says funds, though up, had 20 pct outflows

NEW YORK, Feb 26 (Reuters) - Famed short-seller James Chanos told Reuters on Thursday his hedge fund firm, Kynikos Associates, performed well in 2008, but clients still withdrew about 20 percent of his funds’ assets.

Chanos, who profits by betting against companies he expects will fall in value, thrived in a year when a broad range of financial markets tanked. He declined to reveal his fund’s annual performance, but said the firm “had a good year.”

The average hedge fund specializing in short selling returned 25 percent last year, according to data from hedge fund tracking firm Hennessee Group.

Yet like hundreds of hedge fund managers, Kynikos still suffered from outflows. Chanos, following a Portfolio Magazine breakfast panel discussing the Madoff scandal, characterized the 20 percent net reduction as “reasonable.”

Industrywide, investors last year withdrew some $150 billion of assets from hedge funds. In some cases, struggling funds imposed “gates” to stop redemptions that would trigger more forced selling by their portfolio managers.

Those gates, as a result, prompted many investors to pull money from the funds that had not blocked redemptions, even if they performed well.

“We were like an ATM machine,” Chanos joked. (Reporting by Joseph A. Giannone and Svea Herbst-Bayliss; Editing by Tim Dobbyn)

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