Short seller Orso Partners has taken aim at Affiliated Managers Group Inc, arguing that its exposure to tax-efficient investment strategies developed by AQR Capital Management could face regulatory pressure and threaten future earnings, according to a report by Bloomberg.
The report cites a letter sent to investors as revealing that Orso Partners has built a short position in AMG, which holds a significant economic interest in AQR. The fund argues that rapid growth in tax-aware “long-short” strategies across the industry is increasingly vulnerable to scrutiny from US regulators.
These strategies, which aim to reduce taxable gains for wealthy investors, typically involve holding winning positions longer while offsetting gains with losses elsewhere in the portfolio. The approach has expanded quickly in recent years as investors seek to manage tax liabilities following strong equity market performance.
AQR, co-founded by Cliff Asness, has been one of the most prominent players in the space, scaling its tax-optimised products to tens of billions of dollars in assets. The broader ecosystem of tax-aware investment solutions is now estimated to exceed $1tn across funds, ETFs and managed accounts.
Orso argues that much of this growth relies on structures that could attract closer attention from US tax authorities, particularly where leverage and derivatives are used to generate artificial losses for tax purposes.
The short seller also suggests that recent moves by major platforms to restrict certain account types signal tightening conditions for the strategy, potentially limiting future inflows.
Affiliated Managers, which derives a meaningful portion of its earnings from AQR, has seen strong asset growth in recent years, supported by inflows into the firm’s systematic and tax-optimisation strategies. However, Orso warns that any regulatory shift could disproportionately affect AMG’s earnings base due to its reliance on AQR’s continued expansion.
While AMG’s share price initially moved higher, it reversed gains after the report surfaced and closed lower on the session.
Neither AQR nor Affiliated Managers reportedly commented on the matter.
