Ever since federal agents stormed into its office late last year, Diamondback Capital Management has been working to stay afloat. While other hedge funds swept up in the federal raids decided to close up shop as investors fled, Diamondback management convinced many to stick around and only lost about 20% of assets in the aftermath. Before the authorities raided Diamondback, the fund managed nearly $6bn and was considered among the hottest hedge funds on Wall Street. But as has been the case for other hedge funds, the summer has not been kind to the firm. In August alone, Diamondback’s main hedge fund lost 7%, leaving it down about 5% for the year, according to an investor in the fund. The performance is similar to that of a number of prominent managers, whose assets have been blasted as the equities markets struggle amid uncertainty over Europe. And investors have just reclaimed another $400mn from the fund, or 10% of assets, bringing total investor withdrawals this year close to $2bn. The firm raised some money in August, and now manages about $4 bn. After the November raid, a number of investors decided to stay with Diamondback because they felt the firm would continue to perform well. And indeed the firm was in positive territory before August, which helped it from suffering even greater investor withdrawals, according to the investor. That’s because the deadline for investors to request money back from the hedge fund came before the worst of August’s selloff was over. More redemptions could come before the end of the year, if the firm does not post strong returns by that time. Though Diamondback has been accused of no wrongdoing by authorities, the fund has struggled beneath the cloud of the government’s insider trading investigation. Level Global Investors, another prominent hedge fund raided by federal authorities, decided to close down earlier this year after a rash of investor withdrawals. [Dealbook, 10/3/11]