Hudson Bay Capital Management has joined a growing list of hedge funds that are locking up investor capital for longer by limiting quarterly withdrawals, according to a report by Bloomberg citing unnamed sources familiar with the matter.
In April, Sander Gerber’s firm transitioned clients in its flagship fund to a 12.5% quarterly investor gate level, down from the previous 25%. This change means it will now take investors two years rather than one to fully exit the fund.
According to one of Bloomberg’s sources, the multi-strategy firm believes the change will enhance stability and provide flexibility during periods of market dislocation. Investors can also opt for an even more restrictive 6.25% gate in return for a discounted management fee of 1.75%, compared with the standard 2%.
Hudson Bay first implemented the longer lock-up period for new investments in 2021, and has now extended the terms to all investors.
Other firms to introduce extend lock-up periods include Izzy Englander’s Millennium Management, which requires a minimum of five years to exit, while Balyasny Asset Management imposed a three-year lockup starting in April.
The report cites Hudson Bay as writing in a client note that an “overwhelming majority” of investors supported the term change and that the new policy would create competitive advantages, helping to “deliver attractive returns for years to come.”
“This capital transition will reinforce our ability to withstand market downturns and play offense during periods when markets are most compelling,” Hudson Bay said in the note, highlighting that the firm achieved returns of 11% during the global financial crisis and 15% during the Covid pandemic.
