{"id":5825,"date":"2007-03-19T00:00:00","date_gmt":"2007-03-19T00:00:00","guid":{"rendered":""},"modified":"-0001-11-30T00:00:00","modified_gmt":"-0001-11-30T04:00:00","slug":"hedge-fund-closures-erase-thirty-five-billion-dollars-from-industry","status":"publish","type":"post","link":"https:\/\/hedgeco.net\/news\/03\/2007\/hedge-fund-closures-erase-thirty-five-billion-dollars-from-industry.html","title":{"rendered":"Hedge Fund Closures Erase 35 Billion Dollars from Industry"},"content":{"rendered":"

New York –<\/strong> At least 83 U.S. hedge funds — which had at their collective peak been managing about $35 billion — shut their doors in 2006, according to a survey published in the March issue of Absolute Return<\/em>.<\/strong><\/p>\n

The largest of the closures was Amaranth Advisors\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2 Amaranth LLC, which also made history as the biggest-ever hedge fund shutdown. The $9.1 billion multistrategy fund founded by Nick Maounis failed after losing most of its capital to highly leveraged bets on natural gas.<\/strong><\/p>\n

But while it dominated the headlines, Amaranth was not the only multistrategy or multiarbitrage fund near the top of the 2006 closure list. Others included Archeus Capital Management\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Animi Master Fund, which had peaked at $2.65 billion, Sagamore Hill Capital Management\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Sagamore Hill, which once held about $2.6 billion, and Saranac Capital Management\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Citigroup Multistrategy Arbitrage\/Saranac Arbitrage, which topped out at $2.2 billion.<\/strong><\/p>\n

Rounding the top 10 closures were BKF Asset Management\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s event-driven Levco Alternative Investment Fund, which peaked at $1.9 billon; Ritchie Capital Management\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Ritchie Energy Trading, which once held $1.2 billion; Saranac\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Citigroup Archer\/Saranac Total Return, which ran as much as $1.1 billion; MacKay Shields Long\/Short, a fixed-income fund that had run $1 billion; Mangan & McColl Partners event-driven M & M Arbitrage, which had peaked at $1 billion, and Harbert Management Corp.\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Harbert Convertible Arbitrage Fund, which had run $900 million.<\/strong><\/p>\n

Together, the top 10 shutdowns managed peak assets of $23.6 billion \u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u20ac\u0153 the bulk of the assets run by the shuttered funds. But in a reflection of the continuing bifurcation of the hedge fund industry that favours the largest firms, 39 of the closed funds, or 47%, never reached $50 million of assets. Just 44 of the closures ever made it to $50 million or more, roughly in line with the 43 funds that Absolute Return<\/em> found had run $50 million or more before closing in 2005. But none of the 2005 closures had ever reached $1 billion of assets.<\/strong><\/p>\n

In other results, the investment strategy that produced the largest number of closings was U.S. long\/short equity, with 27 shutdowns, including Saranac\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s Citigroup Archer\/Saranac Total Return. Other strategies with high casualty rates were fixed income and high yield funds, six of which closed, and long\/short biotech equity funds, which also produced six closures.<\/strong><\/p>\n

\n

\n\n\n\n\n\n\n\n\n\n\n\n\n\n
\n

The 10 Largest Closures of 2006 <\/p>\n<\/td>\n<\/tr>\n

\n

Firm name<\/strong> <\/p>\n<\/td>\n

\n

Fund name<\/strong> <\/p>\n<\/td>\n

\n

Peak Assets<\/strong> <\/p>\n

(in millions)<\/strong> <\/p>\n<\/td>\n<\/tr>\n

\n

Amaranth Advisors <\/p>\n<\/td>\n

\n

Amaranth LLC <\/p>\n<\/td>\n

\n

$9,100 <\/p>\n<\/td>\n<\/tr>\n

\n

Archeus Capital Management <\/p>\n<\/td>\n

\n

Animi Master Fund <\/p>\n<\/td>\n

\n

$2,650 <\/p>\n<\/td>\n<\/tr>\n

\n

Sagamore Hill <\/p>\n

Capital Management <\/p>\n<\/td>\n

\n

Sagamore Hill <\/p>\n<\/td>\n

\n

$2,600* <\/p>\n<\/td>\n<\/tr>\n

\n

Saranac Capital Management <\/p>\n<\/td>\n

\n

Citigroup Multistrategy Arbitrage\/Saranac Arbitrage <\/p>\n<\/td>\n

\n

$2,200 <\/p>\n<\/td>\n<\/tr>\n

\n

BKF Asset Management <\/p>\n<\/td>\n

\n

Levco Alternative Investment Fund <\/p>\n<\/td>\n

\n

$1,900 <\/p>\n<\/td>\n<\/tr>\n

\n

Ritchie Capital Management <\/p>\n<\/td>\n

\n

Ritchie Energy Trading <\/p>\n<\/td>\n

\n

$1,200 <\/p>\n<\/td>\n<\/tr>\n

\n

Saranac Capital Management <\/p>\n<\/td>\n

\n

Citigroup Archer\/Saranac Total Return <\/p>\n<\/td>\n

\n

$1,100 <\/p>\n<\/td>\n<\/tr>\n

\n

Mackay Shields <\/p>\n<\/td>\n

\n

MacKay Shields Long\/Short <\/p>\n<\/td>\n

\n

$1,000 <\/p>\n<\/td>\n<\/tr>\n

\n

Mangan & McColl Partners <\/p>\n<\/td>\n

\n

M & M Arbitrage <\/p>\n<\/td>\n

\n

$1,000 <\/p>\n<\/td>\n<\/tr>\n

\n

Harbert Management Corp. <\/p>\n<\/td>\n

\n

Harbert Convertibles <\/p>\n<\/td>\n

\n

$900 <\/p>\n<\/td>\n<\/tr>\n<\/table>\n

\n

*Estimate<\/em><\/em><\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

New York – At least 83 U.S. hedge funds — which had at their collective peak been managing about $35 billion — shut their doors in 2006, according to a survey published in the March issue of Absolute Return. The […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-5825","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/5825","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=5825"}],"version-history":[{"count":0,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/5825\/revisions"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=5825"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=5825"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=5825"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}