From Reuters:

Goldman Sachs Group Inc. and investors including former American International Group Inc. Chairman Maurice “Hank” Greenberg will pump $3 billion into a hedge fund that plunged about 30 percent last week, the investment bank said on Monday.

The hedge fund, which had a net asset value of $3.6 billion before the infusion, is the third managed by Goldman that has been hurt by recent market turmoil. Down about 3 percent before last week, the fund has lost more than $2 billion this year…

But Goldman’s Chief Financial Officer David Viniar denied that the cash infusion into the Global Equity Opportunities fund was a bailout. Rather, it was intended to raise cash to buy stocks in a market where valuations are “way out of whack,” Goldman said.

“This is not a rescue. Given the dislocation, we saw a good investment opportunity for us and other investors,” Viniar said in a rare conference call between quarterly earnings reports”.

Following on the heels of that news, came the following on Wednesday of this week (From Bloomberg):

Goldman Sachs Group Inc. waived fees to draw investors to its Global Equity Opportunities hedge fund after stock-market losses wiped out $1.4 billion of assets this month, according to a person with direct knowledge of the terms.

New participants won’t pay the 2 percent management charge and Goldman will cut its performance fee in half, said the person, who declined to be named because the information is private. The New York-based firm and investors including billionaire Maurice “Hank” Greenberg agreed to put $3 billion in the fund earlier this week. Goldman spokesman Lucas van Praag confirmed the terms and declined to comment further.

Whilst I can agree with Goldman Sachs doing what it can to ensure that it maintains investor (and client) confidence, holding conference calls to announce an injection of cash, and putting “hedge fund management on sale”, via waiving fees, smells of a rescue with a pretty wrapper on it. Even the participation of some rather high profile investors doesn’t change this, as they’re probably savvy enough to realize that their net losses may be lower if they inject cash into the fund, in order to prevent massive redemptions and/or an asset sale.

We’ll have to wait and see on this one, but I suspect many investors are going to pull their funds out anyway, as I doubt anyone is really fooled by this. After all, who really buys that the fund is “just fine” and the extra funds are only to “capitalize on opportunities”? Res ipsa loquitur Goldman Sachs, call it what you will, but I suspect investors know a rescue when they see one.
Finally, let’s not forget that Global Equities isn’t the only Goldman Sachs hedge fund that has been experiencing difficulties lately; I would not be surprised to see more of these types of announcements in the near future. The question offered is: Will these tactics work, or will Goldman Sachs wind up in the “Hedge Fund Dog House” with Bear Sterns?