Eton Park Capital Management is shutting down.
In a letter sent to investors on Thursday, founder Eric Mindich wrote:
“A combination of industry headwinds, a difficult market environment and, importantly, our own disappointing 2016 results have challenged our ability to continue to maintain the scale and scope we believe necessary to pursue our investment program consistent with our founding principles. … We have made the very difficult decision to return your capital, from a position of relative strength.”
A copy of the letter was reviewed by Business Insider.
Mindich, 49, said he plans to return 40% of all investors’ capital by the end of April and that the fund’s other investments would take longer to unwind over the “coming months,” with some taking even longer. Partners and employees of the fund are the firm’s largest investors, Mindich said.
Mindich’s New York-based fund was considered one of the largest hedge fund launches when it started in 2004 with $US3.5 billion. Mindich had worked at Goldman Sachs and is thought to be the youngest person to have made partner at the bank, doing so at 27.
The firm’s flagship fund posted a 9.4% loss last year and assets shrunk from $US9 billion to $US7 billion, according to a January report by Institutional Investor’s Stephen Taub.
News of the closure came as a shock to several people in the hedge fund community, including some investors. Some staff only found out about the closure today, according to people familiar with the matter.
The fund was facing limited redemptions this year, according to an investor briefed on the situation who declined to be named because they weren’t authorised to speak publicly. While investment performance was weak last year, previous years had been strong, this investor said.
Investment performance was roughly flat for this year through mid-March, another person said.
Overall, hedge fund liquidations have outpaced launches, according to the data tracker HFR. More than 1,000 funds closed last year, while a little more than 700 launched. Last year, Perry Capital, another high-profile hedge fund, shut down following performance issues.
The New York Times earlier reported Eton Park would shut down.