Several high-profile hedge funds have moved to sever ties with Bear Stearns since Friday’s rescue, inflicting further damage on its once lucrative prime brokerage business, reports the FT. Alongside Goldman Sachs and Morgan Stanley, Bear was seen as one of the top three US prime brokerage outfits. Funds including Davidson Kempner Partners and Fir Tree Partners are believed to have moved to cut links with Bear on Friday, adding to the exodus of funds since last summer when investor concerns first surfaced. Prime brokerage and the mortgage business are seen as the most attractive parts of Bear for potential buyers but its once extensive roster of hedge fund clients is dwindling. The WSJ, however, reports that through all the tumult, one big hedge fund, Paulson & Co, has stuck by Bear, despite often rocky relations.
