John Griffin Said To Close Blue Ridge Capital Dec 15 2017 | 8:03pm ET Veteran hedge fund manager and original tiger cub John Griffin is reportedly shuttering Blue Ridge Capital after thirty years in the industry and will return capital to investors, as the inexorable bull market in equities and years of low interest rates dent long/short strategies. The fund will be largely wound down by the end of 2018’s first quarter, according to a Bloomberg article citing a December 15 letter from Griffin announcing the closure. “After 30 years in the hedge fund business, I have decided it is time to close our funds and for me to start a new chapter,” Griffin reportedly wrote in the letter. Additional specifics about what that new chapter might entail were not provided. Griffin founded New York-based Blue Ridge in 1996 after Griffin served as the president of Julian Robertson’s famed Tiger Management for several years. This makes him one of the original crop of so-called “tiger cubs” – protégés of Robertson’s who headed out on their own after learning the ropes from one of the industry’s most well-regarded investors. Griffin started Blue Ridge with $55 million in capital and went on to grow AUM to a peak of $9 billion at the end of 2013 after a particularly strong run. Inconsistent returns since then, plus rising competition for assets from passive investment solutions and greater scrutiny on fees, helped trim assets under management to approximately $6 billion. Still, Blue Ridge’s returns averaged 15.4% annually since inception, the letter reportedly added, outperforming the S&P 500’s 8.6% over the same time span. The decision follows similar steps from a number of well-known hedge fund managers this year despite an industry-wide rebound in returns. Earlier this week, John Burbank’s Passport Capital also closed its flagship hedge fund due to losses and will concentrate on cryptocurrency investing going forward, while managers like Eric Mindlich and even Paul Tudor Jones have liquidated funds or strategies. from FINALTERNATIVES
This must be the strangest bull markets ever. Why are so many hedge fund managers biting the dust when the markets are so bullish?
Because a lot of them have a market-neutral mandate, meaning they are literally not allowed to be long the broad market the way an individual would.
I don't understand, how do you make money in the market if you are truly market neutral? In the limit if you perfectly hedge against market movements, to me a mom and pop retail, means you are risk free to market movement so your return must behave like risk free instruments - US treasuries? Please educate me.
The general idea is that you trade things against each other but remain neutral overall. E.g. if you are a long-short PM, you would buy stocks that you think are a good value at this moment. However, if you’re supposed to remain market neutral, you have to either find other stocks that you think are overpriced or simply short some index.