Moore Capital cuts 2/20 & Wingspan Capital shatters

Discussion in 'Wall St. News' started by dealmaker, Dec 11, 2016.

  1. dealmaker

    dealmaker

    Moore Capital Said To Cut Fees on Flagship Macro Managers Fund
    Dec 5 2016 | 10:23pm ET

    Louis Bacon’s Moore Capital Management has become the latest large hedge fund manager to cut the fees it charges investors amid persistent pressures on the industry’s pricing model.

    The New York-based firm will lower the management fee on its $7.5 billion Macro Managers fund, according to an article inThe Wall Street Journallast week that cited an investor letter. The fund, which currently charges 3% annually, will reportedly lower the fee to 2.5%. Like many of its peers, the Moore macro fund suffered significant drawdowns in the first few months of the year, and was still -3.8% in the red as of the end of the third quarter.

    Moore’s decision comes amid similar moves by other large managers. Brevan Howard Asset Management slashed management fees to zero for some investors in September, while Tudor dropped fees on its flagship fund back in May. Other hedge fund firms to reduce what they charge this year include Caxton and Och-Ziff.

    Hedge funds traditionally followed a “2 and 20” fee model which incorporated an annual management fee plus a 20% cut of profits earned, often above a certain threshold. The financial crisis ushered in the first phase of pricing pressure, followed by several years of disappointing performance which, in the face of large fees and a low-return environment, has prompted large investors to question whether they have been getting their money’s worth from the hedge fund industry. Indeed, several large pension plans, including ones in New Jersey, Rhode Island and New York, have dramatically cut back allocations to hedge funds this year.

    Founded in 1989 by Bacon, who used a $25,000 inheritance to kick off his first fund, Moore is a multi-strategy hedge fund manager with approximately $14 billion in AUM invested across a number of vehicles engaged in global public equity and fixed income markets.

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    Wingspan Investment Management To Shutter As Performance Weighs
    Dec 6 2016 | 12:04am ET

    Buck Ratchford’s Wingspan Investment Management is reportedly closing and will be returning capital to investors.

    The decision is rooted in poor performance and difficult market conditions for long/short middle-market credit strategies, according to a Bloomberg article that cites an investor letter.

    Wingspan plans to return 80% of investor capital by the end of next month, the letter says, with the remainder coming by the end of the second quarter of next year.

    Wingspan’s closing comes just a few days after news that tiger cub Tyrian Investments was shuttering its flagship event-driven, long/short hedge fund.

    Founded in 2013 by Ratchford, a former Goldman Sachs partner, Wingspan focuses on leveraged corporate capital structures and targets opportunities across performing, stressed, and distressed credit as well as special situation equities, according to its website. The firm was seeded with $250 million by Reservoir Capital Group and managed more than $1 billion in July 2015. It currently has $800 million in AUM, according to the Bloomberg article, and suffered steep losses last year that have continued into 2016.

    from FINALTERNATIVES
     
  2. dealmaker

    dealmaker

    PS author of the Wingspan article did not know the difference between shatter vs shutter....
     
  3. Sig

    Sig

    Or the concept that going from 3 to 2.5 isn't "cuts 2/20"!
     
    dealmaker likes this.
  4. This is OUTRAGEOUS!!!!! Louis, don´t do this! But I guess, your investors blackmailed you with redemptions, hum?

    I am increasing instead to 3/44 !!!!! Like SAC Capital and Renaissance - before they closed it to new outside investors.
     
  5. The problem with high mgt fees from the manager's point of view is that there seems to be a phenomenon where costs rise in order to justify the high fee load. So the manager somehow "forgets" that so much of his track record was on a much smaller overhead - a great deal of which is fluff.