London-based hedge fund Polygon might just epitomize the hedge fund turn around story of 2010.The once $8.5 billion AUM asset manager, founded by Reade Griffith (formerly CEO of Citadel’s European office) and Paddy Dear (formerly Managing Director and Global Head of Hedge Fund Coverage for UBS Warburg), was facing so many redemptions (their AUM shrunk by over half) that it was forced to suspend withdrawals from its Global Opportunities Fund – its biggest hedge fund – in 2008.
But now, we hear from a source that their Convertible Opportunity Fund is up ~25%.
And the Wall Street Journal reported this morning Polygon’s European Equity Opportunity Fund posted a net gain of 28.4% for 2010; it gained 2.9% in December.
Once the firm with some of the highest paid managers in the industry, Polygon’s Global Opportunities lost 48% of its value in the wake of the Lehman collapse due to positions in convertible bonds, and was eventually forced to shut down completely.
Polygon’s total AUM nosedived 70% to $2.5 billion, according to Financial News. The founder who headed up convertibles and credit investments, Alex Jackson (formerly CEO of Highbridge’s European business), had to leave. In an email, Polygon said that in fact, at their lowest, total AUM only fell to $4.5 billion.
Their disastrous year following Lehman was even described as “one of the hedge fund industry’s most spectacular falls from grace.”
Then in 2009, as the markets rallied and other hedge funds recovered, certain funds continued to hemorrhage.
Instead of liquidating completely, though, Polygon remade and re branded itself. Instead of investing in every corner of the market – from leveraged loans to office blocks to convertible bonds – it narrowed its focus ane set up a number of smaller, specialist funds.
And now they’re laughing.
Financial News wrote last year, “the firm came to epitomize the hedge fund boom… Polygon lived the hedge fund dream.”
Now they’re obviously living it again.
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