Atticus Capital, once one of the highest flying hedge fund firms, is handing $3 billion back to his investors and closing down a flagship fund, The Wall Street Journal reported this morning.
Atticus was founded by Timothy Baraket, who received his BA in Economics from Harvard. He was a famously talented hockey player at Harvard, scoring 79 goals in his senior year and was drafted by the New Jersey Devils. He turned down the offer to go to Harvard Business School. After only a few years working as at the merger arbitrage fund Junction Advisors, he set up Atticus with $6 million. By 2007, Atticus had $20 billion under management. That year Baraket is said to have been paid somewhere around $750 million.
The Atticus Global Fund was an activist fund, pressuring companies in which it invested to change strategies and management. Many of its biggest winners were bets in the financial sector. But last year Atticus suffered losses of between 25% and 32% in its two main hedge fund. rumours were circulating last September that Atticus was liquidating its positions and suffering steep redemption demands. Atticus denied those rumours at the time. Atticus wasn’t highly leveraged, which many thought might mean the fund could thrive during a credit crunch that made it harder for competitors to boost returns with borrowed money.
But the end has finally come. Atticus is closing down the Atticus Global Fund, which Barakett managed, as well as a smaller fund. The firm will continue to manage the $1.2 billion Atticus European Fund.
Deal Journal printed the letter announcing the closing of the funds:
August 11, 2009
Dear Investor in Atticus Global, Ltd. and Atticus Global, LP:
I am writing to inform you of my decision to close the funds I manage, including Atticus Global, Ltd. and Atticus Global, LP (together, the “Atticus Global Fund”). This decision will come as a surprise to most of you, especially given that we have received redemptions of less than 5% of capital and your loyal support over the past 15 years.
I have used the market’s recent strength to begin liquidating a significant amount of our holdings. We currently expect that the portfolio will be fully liquidated by September 30th and that we will be in a position to return approximately 95% of your capital in early October. The balance of investor capital will be returned after the final audit is completed, which should be later this year.
My decision is solely a personal one. After fifteen years of being singularly focused on building and managing Atticus, I believe it is time to reassess my future. I intend to spend more time with my family, pursue my philanthropic interests and establish a family office to manage my own capital and charitable foundation.
Atticus (the management company) will continue to operate, and the Atticus partnership will remain intact. In addition, it is my partner David Slager’s intention to continue to manage the Atticus European Fund.
I founded Atticus in 1995 and launched our first fund in January 1996 with less than $6 million under management. The Atticus Global strategy was launched in December 1996 and has compounded investor’s capital at over 19% net annually since inception.1 I am very proud of the Atticus Global track record and our net returns through July 2009 are shown below:
Atticus Global S&P 500
1 year -13.3% -20.0%
3 year 0.8% -6.2%
5 year 9.3% -0.1%
10 year 13.6% -1.2%
Inception 19.3% 3.9%
Cumulative 835.3% 62.3%
1 The Atticus Global Fund was formed in April 1999. The statistics set forth in this letter include the period from the inception of the Atticus Global strategy in December 1996 as a managed account.
I am also very proud of Atticus’ overall investment results: from the inception of our first fund in January 1996 through July 2009, funds managed by Atticus have generated almost $7 billion of profits for our investors.
I have been blessed with great investors, partners, employees, and a lot of good luck. I am thankful and sincerely appreciative of the trust and confidence you have placed in me and our organisation.
/s/ Timothy R. Barakett
Timothy R. Barakett
Founder, Chairman & CEO
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