Perry Capital To Shutter Flagship Hedge Fund

Sep 26 2016 | 11:24pm ET

Event-driven hedge fund manager Perry Capital will close its flagship fund and begin returning capital to investors in October. 

The news was revealed in a letter to investors on Monday, according to Reuters. 

"Although I continue to believe very strongly in our investments, process and team, the industry and market headwinds against us have been strong, and the timing for success in our positions too unpredictable," wrote co-founder Richard Perry in the letter.

The firm will return a “substantial” amount of investor capital in the beginning of October, according to the letter, while less liquid positions will be closed over the next year or two. Some employees will reportedly remain in place to shepherd these remaining positions through closure. 

Perry Capital was founded in 1988 by Perry, a former Goldman Sachs executive, and Paul Leff. One of the industry’s most iconic hedge funds, it booked an average annual return of 15% for its first 20 years, according to Bloomberg, and didn’t have a down year during that period.

However, in recent years Perry’s investing style, which focused primarily on event-driven strategies, faced rougher waters. The fund has been down in each of the last three years, according to Bloomberg, while assets have fallen from a peak of more than $15 billion in 2007 to about $4 billion now. 

The closure comes amid one of the most difficult years for hedge fund managers since the financial crisis. According to data from Hedge Fund Research, a total of 530 funds liquidated, putting the pace of closures on track to hit the second-largest total since HFR began tracking the data in 1996.

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