Is Vega in the Killing Fields? Vega says no way, Joselito

Denial is not just a river in Egypt. Just when you thought that cliché had been thoroughly beaten to a pulp, along comes Vega Asset Management to give it a whole new lease on life. The hedge fund firm that has seen its assets plunge by billions of dollars in recent weeks following steep losses on bond and currency trades, has sought to reassure investors that it remains "strong and stable".

A big proportion of the losses have come in recent weeks as the firm was caught out by a bond price rally and short position in the New Zealand dollar, which has been the best performing major currency over the past month.

In a letter to investors, seen by Financial Times, Michael Mann, president of Vega, said that September had been a "difficult month", adding that while the firm was clearly not pleased with its funds' recent performance, it remained convinced of its ability to deliver superior risk adjusted returns.

The email via which the letter was delivered, featured an addendum which, said: "The funds represent speculative investments and involve a high degree of risk. An investor could lose all or a substantial portion of his/her investment."

One hedge fund industry source said: "They had pretty significant losses in August too, down about 10 per cent over the month. It makes you question if there is any significant edge or value added in a prudent way by the managers of the funds, or if they are simply taking bets."

A London based fund of hedge funds manager said the only orders that brokers were now accepting from Vega were liquidation orders, adding that he did not see how the fund's managers would make the money back.

The man obviously doesn't believe in the power of prayer.

http://msnbc.msn.com/id/15147003/