Boss Capital is shutting down

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KIS Capital shuts down, to return $260m to investors

Sydney-based hedge fund KIS Capital will return the $260 million of funds to investors after 10 years of managing money.

The hedge fund’s management told staff on Thursday and wrote to clients on Friday morning to tell them of the decision, which they said would “come as a surprise”.

KIS Capital was founded in 2009 by Josh Best and Michael Surridge and had delivered annualised returns of 11.4 per cent to May, before deciding to return funds to investors.

“We are proud of KIS Capital’s long-term track record for outperformance, often through periods of extreme market volatility, made possible by the hard work of our talented and dedicated team,” Mr Best and Mr Surridge said in the letter to investors.

The fund said recent returns had been “disappointing”.

“Given the state of the market, KIS Capital directors have concluded that the best course of action at this point is for us to close both funds and return capital to all investors on an equitable basis, which we believe is in the best interest of investors.”

KIS, which stands for “Keep It Simple” was started in 2009 by Mr Best, who worked his way from the mail room at broker Tricom, and Mr Surridge, a former trader at French bank BNP, just after the global financial crisis.

It began with $5 million of capital and increased its funds to $150 million by 2020 before its assets peaked at $300 million.

The fund’s closure came after a tough 2020 for many long/short Australian hedge funds, many of which produced double-digit declines.

KIS fared better than most, eking out a 1.5 per cent return for the calendar year, while snaring a nomination for the Eureka Hedge best long/short Asian fund.

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Tourbillon Capital hedge fund is shutting down

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Another hedge fund bites the dust.

Tourbillon Capital — led by SAC Capital alum Jason Karp — is shutting down after six years, according to a letter sent to investors Oct. 8.

“We have recently not delivered the results that you expect of us and what we know we are capable of,” Karp wrote, adding that the fund is starting a “prudent” wind-down of assets and will be returning more than $1 billion to investors by year-end.

Tourbillon is the third major hedge fund closure this month.

San Francisco-based Criterion Capital Management announced plans to shut down last week on the heels of $12 billion Highfields Capital announcing its plans to shut down as well.

The $3.2 trillion hedge fund industry has had a tough run in recent years as investors have been able to get favorable returns in low-cost index funds without the hefty hedge fund price tag.

For Tourbillon, which “delivered outsized returns” in its first three years, recent returns have been underwhelming. The fund shed 2.6 percent through August, according to a person familiar with the matter, while the S&P 500 gained 8.5 percent over the same period.

Annualized returns for Tourbillon averaged 12.3 percent, the person said.

Although Karp plans to return investor money, he is not fully out of the game.

Karp and his partners plan to continue investing their own funds in a “radically different, unconstrained manner.”

Separately, the hedgie plans to invest in health and wellness companies — including Hu Kitchen, a health food restaurant and store he launched with his family six years ago.

Hedge Fund Eton Park Is Shutting Down After a Decade

Eric Mindich at the CNBC Institutional Investor Delivering Alpha Conference in New York on July 15, 2020.

Photographer: Heidi Gutman/CNBC/NBCU Photo Bank via Getty Images

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Eric Mindich at the CNBC Institutional Investor Delivering Alpha Conference in New York on July 15, 2020.

Eric Mindich, a one-time Goldman Sachs star trader who jumped into the hedge fund industry during its heyday, is throwing in the towel on his $7 billion firm.

Mindich — whose Eton Park Capital Management was among the biggest fund startups — is returning client money after 13 years, he said in a one-page letter to clients Thursday. The firm expects to return 40 percent of all investors’ capital by the end of next month.

“Recently, a combination of industry headwinds, a difficult market environment and, importantly, our own disappointing 2020 results have challenged our ability to continue to maintain the scale and scope we believe necessary to pursue our investment program consistent with our founding principles,” Mindich, 49, wrote.

The decision follows the fall of another Goldman alumnus who ran a multibillion-dollar hedge fund. In September, Richard Perry called it quits, announcing that he was closing his main fund after almost three decades. Last year was the toughest for hedge fund closures since 2008. Liquidations totaled 1,057, according to Hedge Fund Research Inc.

Unlike some of the other firms, Mindich had net inflows in his main hedge fund last year. But it lost 9.4 percent in 2020, in part from a wrong way bet on Japanese equities, according to people familiar with the matter.

Global Player

Performance this year was flat, according to one of the people. Since Eton Park’s inception, it averaged annual returns of 9.4 percent and made money in the previous four years, including a 22 percent gain in 2020, one of the people said.

From the start, Mindich had set up his fund to be a global player, with offices in New York and London, and a team approach that focused on companies going through turnarounds, bankruptcies and other corporate events. It was an operation he wasn’t sure he could continue given that assets had fallen by 50 percent since 2020.

“As responsible stewards of your capital, we have been unwilling to compromise on the business model and investment program in which you invested or the way in which we have pursued it,” Mindich wrote. “As a result, we have made the very difficult decision to return your capital, from a position of relative strength.”

Mindich expects to return the rest of the money to clients in the coming months, though certain special investments will take longer, he said in the letter.

Mindich raised about $3.5 billion when he opened Eton Park in November 2004, the biggest startup in the industry at the time. It was a golden time for hedge funds when Wall Street traders were quitting big banks in droves to become their own bosses and hopefully make their fortune.

Before starting Eton Park in 2004, Mindich spent 15 years at Goldman, where he ran both the equities and equities arbitrage businesses and eventually served as senior strategy officer. He became the youngest partner in Goldman’s history at the age of 27, and was a member of the bank’s risk-arbitrage desk that came to spawn a group of big-name managers including Perry and Dan Och.

A spokesman for Eton Park declined to comment.

— With assistance by Saijel Kishan, and Katia Porzecanski

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