Family Office
US Hedge Fund Firm Shuts To Outside Clients, Joins Trend Of Family Office Conversion
A US hedge fund that operated for almost two decades has joined a trend of converting into a family office.
A hedge fund manager in the US is returning money to clients and transforming his firm into a family office structure, continuing a trend of recent years that has seen a number of industry luminaries take the same course.
Media reported that Doug Hirsch is handing back money to clients from his hedge fund, Seneca Capital Partners. He has run that fund for almost 20 years. According to Bloomberg, it oversaw around $500 billion and focused on event-driven strategies, making money out of merger and acquisition deals and other restructurings and corporate moves.
The decision puts Hirsch in the same bracket as hedge fund industry figures as Steve Cohen, George Soros, Scott Bommer and Stanley Druckenmiller, who have focused on running family money, shutting doors to non-family clients. In some cases, rising regulatory burdens for firms overseeing outside wealth has been a factor. In the Seneca case, investment performance appeared to be a trigger.
According to a letter sent by Hirsch to clients, he said he was no longer “able to continue making the commitment and sacrifices required to run outside capital”.
“Despite negligible redemption requests and increasing market opportunities that are the result of a challenging year in event-driven investing, I cannot in good faith start next year with the dedication required to manage your capital,” the letter, cited by Bloomberg, said.
The firm is returning money amid the worst year since 2011 for event-driven funds, which on average declined 2.3 per cent through November, according to industry data. The news service noted that a number of firms have closed certain funds in a year of weak or non-existent profits, giving examples such as LionEye Capital Management, BlueCrest Capital Management, Fortress Investment Group and BlackRock.
Hirsch was quoted as saying that he will continue investing his own money through Seneca and intends to make a “significant” allocation to a fund that his partner, Jon Schwartz, is planning to start.