| BOSTON, April 8
BOSTON, April 8 Hedge fund Coatue Management
plans to return as much as 35 percent of its assets to investors
this summer after its $7 billion flagship ballooned in size.
Telling investors that the firm does not want to become an
"asset gatherer," Coatue in a letter said that it made the
"tough" but "necessary" decision to return between 25 percent
and 35 percent of the main fund's capital on June 30. Portions
of the letter were read to Reuters by a person familiar with the
fund but not permitted to discuss it publicly.
Coatue becomes the latest in a string of prominent hedge
funds to return money to investors to keep from growing too
large at a time many more investors are trying to put money into
Founded in 1999 by Philippe Laffont, Coatue makes big bets
on technology oriented stocks and counted Apple,
Facebook, and Netflix among its biggest
investments at the end of the fourth quarter, according to a
The firm said it considered returning capital for many
months and made the decision to avoid becoming what some
industry analysts call asset gatherers where fund managers
eagerly pull in new money even if they don't have fresh ideas
about where to invest the cash.
Coatue, whose manager was trained at Julian Robertson's
famous Tiger Management, announced its decision just days after
telling investors about the firm's first quarter losses. Coatue
lost 8.7 percent in March, in the wake of a sell-off last month
and ended the first three months of the year down 7.4 percent.
The question of size has long been a critical topic for
hedge fund managers and investors alike, with many saying it is
prudent to return capital if the fund has grown too quickly and
investment opportunities are more limited. Coatue's flagship
fund grew from $1 billion to $7 billion within six years. The
appropriate size for the fund is closer to $5 billion, the
Late last year, Daniel Loeb's Third Point, Jon Jacobson's
Highfields Capital and Seth Klarman's Baupost Group, returned
money to investors to keep their firms from growing too quickly.
In the past, Chase Coleman's Tiger Global Management has also
returned money to investors.
Even as some of the industry's top managers are now closed
to new money, demand for hedge funds continues to grow among
institutional investors who added another $32.6 billion to hedge
funds in the first quarter, according to data from Eurekahedge.
In the fourth quarter, investors added $10.5 billion in new
money, according to Hedge Fund Research.
(Reporting by Svea Herbst-Bayliss; Editing by Sofina