Element Capital Management, the global macro hedge fund firm founded by Jeff Talpins, is planning to return around $4bn in external capital to clients as it looks to improve performance and focus on managing its own funds, according to a report by Reuters.
The reports cites unnamed sources with knowledge of the matter as revealing that rather than returning capital on a pro-rata basis following losses of around 20% over the past three years, the hedge fund is cutting smaller clients while allowing larger investors, some of whom pay higher fees, to remain invested and potentially recoup their losses.
Element, which was up 6.7% in Q1 2024, charges most of its clients a 2% management fee and 40% of profits, although charitable groups such as endowments and foundations, which tend to be smaller, pay 2% and 20%.
While Talpins is cutting the amount of client money his firm manages, he’s adding $500m of his own capital to the hedge fund.
According to one Reuters source, once the money is returned to investors by the end of the month, and Talpins has added another $500m of his own capital, Element will have around $5bn in assets split almost 50-50 between external and internal capital.
The firm currently manages about $8.5bn.
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