Hedge fund manager James Palotta is to close his USD800m Raptor Global fund following investor withdrawals and losses, according to media reports.
Palotta, co-owner of the Boston Celtics baseball team, wrote in a letter to investors that he had grown sceptical of the "sustainability of certain aspects of the industry's structure and short-term focus." His plan is to restart the fund after taking several months out to formulate a new investment strategy.
"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 wrote to clients in the letter dated June 2.
Investors are to receive 75 per cent of their investments in cash in early July and 15 per cent in assets. According to the letter the remainder of assets will be returned "as soon as is practicable, thereafter".
At its peak in mid 2007, Raptor, which was spun out of Tudor Investment Corporation on January 1 when Palotta ended his 15-year partnership with Paul Tudor Jones, managed nearly USD9bn in assets. That declined to about USD5bn by last August and like many other hedge funds, Raptor suffered further significant losses in the Q4 2008 followed by investor withdrawal requests.
Since its creation in 1993, the Raptor fund produced average annual returns of 14 per cent, nearly double the Standard & Poor's 500's 6.5 per cent return over the same period. This year, the fund's returns have been flat.