Key Takeaways
- • BlueMountain Capital, a $21 billion hedge fund, is closing its long-short equity fund just two years after launching the strategy, representing a strategic retreat from a core equity initiative.
- • The fund managed approximately $1.2 billion in assets as of September 2017 under the long-short strategy before its closure.
- • Four equity portfolio managers were terminated this week following the decision to wind down operations, despite the firm having recruited talent from prominent hedge funds including Leon Cooperman's Omega Advisors and Anand Parekh's Alyeska Investment Group in 2018.
- • The closure is unrelated to BlueMountain's increased exposure to troubled California utility PG&E announced in November 2018, according to sources close to the firm.
Summary
BlueMountain Capital Management, the $21 billion hedge fund, is shutting down its long-short equity fund after a brief two-year operational period, marking a significant strategic pivot for the investment firm. The decision to wind down the strategy was accompanied by the termination of four equity portfolio managers this week, signaling a substantial restructuring of the fund's equities division.
The long-short equity fund had managed approximately $1.2 billion in assets as of September 2017, according to regulatory filings. BlueMountain had made a concerted effort to build out its equities capabilities through 2018, recruiting experienced portfolio managers from established hedge funds. The firm hired Mahmood Reza from billionaire Leon Cooperman's Omega Advisors to manage financial sector investments and Sanket Patel from Alyeska Investment Group, the fund founded by Citadel alumnus Anand Parekh, to oversee energy investments. Additionally, the firm had appointed Lance Rosen, the former president and chief investment officer of Kinross Capital, to lead its equities strategy in July 2017, and promoted Jared Gould to portfolio manager status in early 2018.
Despite the significant talent acquisition and organizational restructuring in 2018, the long-short strategy failed to gain traction within BlueMountain's broader portfolio. The fund's decision to shut down the initiative comes as the hedge fund industry faces persistent performance pressures and investor redemptions. Notably, sources close to the firm have emphasized that the equity fund closure is unrelated to BlueMountain's decision in November 2018 to increase its investment position in PG&E, the California utility company facing significant financial headwinds from wildfire-related liabilities.
The long-short equity fund had managed approximately $1.2 billion in assets as of September 2017, according to regulatory filings. BlueMountain had made a concerted effort to build out its equities capabilities through 2018, recruiting experienced portfolio managers from established hedge funds. The firm hired Mahmood Reza from billionaire Leon Cooperman's Omega Advisors to manage financial sector investments and Sanket Patel from Alyeska Investment Group, the fund founded by Citadel alumnus Anand Parekh, to oversee energy investments. Additionally, the firm had appointed Lance Rosen, the former president and chief investment officer of Kinross Capital, to lead its equities strategy in July 2017, and promoted Jared Gould to portfolio manager status in early 2018.
Despite the significant talent acquisition and organizational restructuring in 2018, the long-short strategy failed to gain traction within BlueMountain's broader portfolio. The fund's decision to shut down the initiative comes as the hedge fund industry faces persistent performance pressures and investor redemptions. Notably, sources close to the firm have emphasized that the equity fund closure is unrelated to BlueMountain's decision in November 2018 to increase its investment position in PG&E, the California utility company facing significant financial headwinds from wildfire-related liabilities.
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