HedgeFund DeathWatch: PERRY CAPITAL Cuts

Even Wall Street's biggest superstar investors are being rocked by the tumult ravaging the markets

Renowned New York hedge-fund honcho and political powerbroker Richard Perry is facing down his first losing year in hedge-fund investing since launching his fund some 20 years ago.

The ex-Goldman Sachs billionaire manager of Perry Capital is shrinking his staff and battening down the hatches at his firm, which boasts tony digs in the General Motors Building.

His flagship fund Perry Partners International recorded a third-quarter loss of 6.13 percent, bringing his year-to-date performance down 9.32 percent, according to people familiar with the matter.

The hedge fund, which has reduced its equity holdings amid the stock market's meltdown, trimmed staff recently, including professionals Jon Cheng, a retail stock manager, and Ted Martin, a risk-arbitrage portfolio manager, according to industry newsletter Hedge Fund Alert.

To be sure, Perry Capital is not the only big-name hedge fund getting dinged by the markets.

As The Post reported earlier, oil baron T. Boone Pickens has been whacked by volatility in commodities. The tycoon, who has been touting a widely publicized plan to shake the US of its dependence on foreign oil, has lost some $1 billion in capital.

Other hedgies, including Stevie Cohen's SAC Capital and John Paulson's Paulson & Co., have moved a lot of their funds into cash in order to avoid market turmoil.

Perry's funds had been bracing for rocky times and had sidestepped much of the pain that had upended his peers until late September when unprecedented freeze-ups in the credit markets and shakiness in equities took many hedge-fund managers for an unprecedented roller-coaster ride.

"The traditional long/short equity model is undergoing rethinking and Perry Capital has taken appropriate steps to restructure so that it may better capitalize on more appealing current investment opportunities," said a Perry Capital spokesman.

Perry, who has been lauded as one of the first hedge-fund gurus to benefit from the implosion in subprime mortgages a year ago, is hoping to take advantage again.

He's aiming to invest in high-yielding, low-risk bank debt, as well as near-prime and Alt-A residential mortgages, sources told The Post.

In political circles Perry is known for having hosted a blockbuster meeting between presidential hopeful Barack Obama and Caroline Kennedy at his Sutton Place penthouse - a move some credit with helping Obama score the Democratic nomination over Sen. Hillary Clinton."