Can star managers who blew up in 2008 come back?
Centaurus Capital wasn't the worst-performing hedge fund firm last year by a long shot. But the London firm's event-driven fund Centaurus Alpha fell about 20%, leading to a mad dash for the exits by investors. With monthly liquidity for those giving three-months' notice, Centaurus rec...
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| Published in: | AR: Absolute Return + Alpha 2009-11 |
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| Main Author: | |
| Format: | Article |
| Language: | eng |
| Subjects: | |
| Online Access: | Get full text |
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| Summary: | Centaurus Capital wasn't the worst-performing hedge fund firm last year by a long shot. But the London firm's event-driven fund Centaurus Alpha fell about 20%, leading to a mad dash for the exits by investors. With monthly liquidity for those giving three-months' notice, Centaurus received redemption notices from about half its limited partners. Like a number of other funds in such a situation, Centaurus became, as one person close to the firm notes, "a bank account." But unlike others who continued to run their funds with fewer assets and a high-water mark to meet before earning fees again, Centaurus managers Bernard Oppetit and Randy Freeman decided to close up shop and start anew. Centaurus is one of a number of prominent hedge fund firms, including Ospraie Management, Polygon Investment Partners, Gandhara Advisors, Amber Capital and Tontine Capital, that have done the same. After closing down funds in the past year, they've either opened a new fund, or are planning to do so soon. For Centaurus, the decision was a tough one. Late last year, the two founders, who started Centaurus in 2000 after leaving BNP Paribas, had a dilemma. Should they simply give the money to all of the investors who want to redeem? That would mean they'd have to sell everything they could, leaving those willing to stick with the fund with everything else. Or they could have thrown up a gate, like more than 100 other funds did. Oppetit and Freeman even proposed restructuring the fund, giving back 50% in cash and locking up the rest for a year, but investors were not in a position to lock in capital. So, the two men took more drastic action. They closed Centaurus's flagship fund, which was down from a high of $4 billion to just $1 billion. |
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| ISSN: | 2151-1837 2151-1845 |