Raptor Global Fund Closing Down

Discussion in 'Wall St. News' started by Hook N. Sinker, Jun 2, 2009.

  1. http://www.marketwatch.com/story/pallotta-to-wind-down-raptor-global-funds

    Jun 2, 2009, 5:56 p.m. EST

    Pallotta to wind down Raptor Global Funds
    Former Tudor trader suspends redemptions, plans comeback
    By Alistair Barr, MarketWatch
    SAN FRANCISCO (MarketWatch) -- James Pallotta told investors Tuesday that he's shutting down the Raptor Global Funds, becoming the latest hedge fund veteran to step back from the industry.

    Pallotta, chairman of Raptor Capital Management, has suspended redemptions from the funds and stopped day-to-day investing for a few months, according to a letter Raptor sent to investors on Tuesday, a copy of which was obtained by MarketWatch. A spokesman for the firm declined to comment.

    However, the former Tudor Investment Corp. equities trader is planning a comeback soon, possibly later this year. With that in mind, Pallotta is keeping his management company up and running, he said in the letter.

    "The decision to wind down the Funds and to begin returning capital in early July should be seen in context," he wrote. "I am no less passionate about investing and trading today than I was 22 years ago. In fact, quite the contrary is true."

    "Once the process of returning capital is smoothly underway, I intend to step back from day-to-day investing for a few months to spend valuable time crafting an optimal investment strategy in order to capitalize fully on the next several years' developing investment opportunity set," Pallotta added.

    After record losses and massive investor redemptions last year, the hedge fund industry remains under pressure, despite a recovery in performance so far in 2009. Last week, Pequot Capital, a hedge fund firm run by another industry veteran Arthur Samberg, said it's shutting down in the midst of a government investigation. See full story.

    Pallotta has been a leading equities hedge fund manager for many years. He began working at Paul Tudor Jones' Tudor hedge fund firm in 1993 and Raptor grew within that group.

    The Raptor Global funds returned 13.85% a year on average from Oct. 1, 1993 to the end of May this year, after fees. That compares to average annualized returns of 6.53% for the Standard & Poor's 500 index during the same period, Pallotta said in his Tuesday letter to investors.

    At their peak in 2007, Raptor Global funds oversaw roughly $9 billion. However, Pallotta lost money last year and some investors redeemed. As 2009 began, Pallotta separated his business from Tudor. The funds currently manage about $1 billion. See related story.

    However, Pallotta remained cautious this year, keeping cash levels high at Raptor. The funds are roughly "flat" this year, through the end of May, he noted in his letter to investors.
  2. This is the "related story" mentioned above. NOTE: dated Aug 7, 2008


    Aug 7, 2008, 10:52 a.m. EST

    Pallotta to leave Tudor
    Giant hedge fund firm plans to spin off Raptor
    By Alistair Barr, MarketWatch
    SAN FRANCISCO (MarketWatch) -- James Pallotta, vice chairman and managing director of U.S. public equities at Tudor Investment Corp., is leaving the giant hedge fund firm and plans to launch the Raptor Global Funds unit he runs as a separate business, according to a letter Tudor sent to investors this week.

    Pallotta will spin off Raptor at the end of 2008 and set up a new, independent firm that will initially focus on public equity investments, Tudor explained. Over time, Raptor will branch out into private investments too, the firm added in the letter, a copy of which was obtained by MarketWatch.

    "Tudor will support Jim in the creation of his new firm and anticipates that it will invest capital in new funds Jim launches," Paul Tudor Jones II, chairman of Tudor, wrote in the letter. "We expect there will be many opportunities for collaboration on investments in future years."

    A spokesman for Tudor said the firm declined to comment.

    Pallotta will continue to manage the Raptor Global and Altar Rock Funds as well as a portion of Tudor's main BVI Global Fund. On Jan. 1, 2009, the management of the Raptor Global Funds will transition to the new firm.

    Draw down
    Tudor is known mainly as a global macro hedge fund firm. Its main BVI Global fund pursues investment ideas anywhere around the globe and is free to trade a variety of securities. Raptor Global is an equity hedge fund, so is more focused.

    The separation comes after a rough patch for Pallotta. The Raptor Global fund was down almost 20% from May 2007 through the middle of July. That's the largest "draw down," or loss, since the fund was started in 1993, according to performance data compiled by European private banks. The fund is down almost 5% so far this year.

    That's in stark contrast to Pallotta's long-term record. The Raptor Global fund has returned more than 16% a year since it started, easily out-performing equity market indexes.

    Tudor's main BVI Global fund has performed better. It's up more than 4% so far this year through mid-July. The fund has generated annual returns of more than 23% since it started in 1986.

    Hedge funds in general had a tough month in July.

    Hedge funds tracked by Hennessee Group LLC fell 1.95% on average in July, partly because a popular trade of betting against financial-services stocks and investing in energy-related securities backfired.

    "Hedge funds underperformed in July due to sharp reversals in the equity markets during the second half of the month," said E. Lee Hennessee, Managing Principal of Hennessee Group. "One of the most common and profitable themes among managers for the first half of the year - short financials and long energy - experienced a very sharp reversal in July."

    The S&P Banking Index surged almost 50% from its low point in mid-July, while managers who were long energy suffered losses as the S&P Energy Sector dropped 14% last month, Hennessee explained.
  3. Illum


    I heard something to the effect of, a hedge fund manager wont get paid on gains until the fund is whole again. Is that behind the shut down? Just wants the cut again?
  4. Translation: He's a "bull market hero" who doesn't have a clue and yes, he'd rather start anew instead of boosting the fund back up to its highwater mark. :cool:

  5. there are quite a few "bull market hero" about.
  6. raptor global funds . .. what a name! . . . this should've alerted investors from the outset . . trying to sound sharp, insightful, dangerous . .

    very cheap