Illiquid assets that are extremely hard to value

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Christopher Addy, president of Castle Hall Alternatives, which provides operational due diligence services for hedge fund investors said, “Valuation of these instruments can be extremely challenging. There is no “standard” pricing process and investors need to understand each fund’s procedures to value securities for the monthly net asset value (NAV) calculation. Ultimately, though, you can’t lose sight of the simple maxim that any security is only worth what someone will pay for it, at the time you want to sell it. For funds holding exotic CDO’s and other hard to value instruments, the only true test of value is the price in the market when the fund needs to sell.”..........

http://www.duediligencedigest.com/ialt/ddd/issue.aspx?id=126