UK-quoted hedge fund manager RAB Capital has warned its profits may fall below expectations after its largest fund, the $2bn (€1.4bn) Special Situations fund, lost 10% of its value in November.

The firm told the London Stock Exchange this morning: "Trading conditions for November have been difficult, and given the influence of performance fees on profitability at RAB, and the proximity to year end, this is likely to have an impact on the overall profitability of the group for 2007. This will however be somewhat offset by the increase in management fees as a consequence of our increased assets under management over the year."