Steve Eisman’s $7 B. Hedge Fund FrontPoint On Death’s Door

steve Steve Eismans $7 B. Hedge Fund FrontPoint On Deaths DoorFrontPoint Partners, one of the most important hedge funds in the country, may not live to see another Thanksgiving. According to several news reports, its investors want to pull about $3 billion from the $7 billion hedge fund, whose Steve Eisman had one of the most famous epiphanies of the housing crisis.

The firm had been pulled into the gargantuan insider trading investigations because of the charming Joseph F. “Chip” Skowron III, FrontPoint’s health-care funds co-head. Mr. Skowron, a strongly chinned former Harvard surgeon who left for Wall Street, is said to carry a photo of himself in a Kosovo operating room with a sick child. He allegedly saved FrontPoint $30 million thanks to illegal information from a man named Yves M. Benhamou. He also drove a blue Ferrari 458.

“If I get even a whiff of an investigation, I want to get out before the next guy, especially if I know they have illiquid stuff or I don’t know what they have,” the head of a fund of funds told the FT, which reports senior FrontPoint staffers “are interviewing for jobs with other firms.”

Mr. Eisman did not immediately respond to an email. Nor did a spokesperson for Morgan Stanley, which announced it was selling its stake in FrontPoint earlier this year.

It has not been a good holiday for hedge fund moguls. Besides those investigations, Blackstone and Goldman Sachs have recently pulled money quite angrily from Phil Falcone.

Update: “As part of our effort to keep our investors informed, we would like to provide you with a business update,” a memo today to investors from FrontPoint co-CEOs Dan Waters and Mike Kelly begins. The memo, obtained by the Observer, plays it cool: It says that about $1.5 billion of the $3 billion withdrawal requests are for the scandalized health care funds, and that, better yet, “we are working with several clients who have indicated that they may rescind their redemption requests.” Some of the withdrawal requests, in other words, have been withdrawn; but FrontPoint doesn’t say exactly how many. “We would like to emphasize,” the memo’s continues, “that FrontPoint remains stable operationally and financially.”