Even though hedge funds are said to be recovering from last year’s bloodbath, “green shoots” are all over the place, and even jocks are finding it timely to launch some funds, clients of Cerberus Capital Management are erring on the safe side of the street, choosing to redeem most of their money.

Hedge funds were hit with record withdrawals last year, forcing them to liquidate holdings at fire sale prices to meet the demands, which triggered many to close shop. And with funds as large and respected as Cerberus still being hit with redemptions, the state of the asset class might not be as rosy as many are saying it is.

The Wall Street Journal reports that clients owning more than $4 billion of the $7.7 billion in assets in the Cerberus Partners hedge funds have opted to liquidate their holdings, rather than allow Cerberus to collect its typical fees and continue making new investments.

Wall Street Journal:

Mr. Feinberg [Stephen Feinberg, Cerberus’ co-founder] striking an apologetic tone, personally called Cerberus clients this week to share the tally, which was current as of Friday and could still change, according to people familiar with the discussions.

Cerberus executives hope that some investors who have opted for withdrawals can be convinced to change their minds, people familiar with the matter said.

Investors had been told they had until this week to vote on the fate of their hedge-fund holdings, a choice that was fraught, the people say. The tradeoff: liquidate now for an uncertain payout, or stay with Cerberus and roll the dice on a new fund.

That a significant portion of investors decided to walk is a comedown for Mr. Feinberg and Cerberus, long one of the biggest and most successful private equity and hedge-fund firms and best known of latefor its two failed investments in Chrysler LLC and GMAC LLC. Just a few years ago, investors clamored to get into Mr. Feinberg's funds, as the firm benefited from a boom in hedge funds and its own strong track record.