Reuters logo
3 years ago
Exclusive: Hedge fund COMAC to return money after Swiss franc move, poor returns
January 21, 2015 / 9:25 AM / 3 years ago

Exclusive: Hedge fund COMAC to return money after Swiss franc move, poor returns

LONDON/BOSTON (Reuters) - COMAC Capital is returning money to outside investors after suffering heavy losses on a currency trade last week, becoming the second hedge fund in less than a week to take dramatic steps after being battered by the Swiss franc's unexpected surge.

The London-based firm's $1.2 billion COMAC Global Macro fund lost 8.0 percent when the Swiss franc surged as much as 40 percent against the euro after Swiss National Bank (SNB) lifted its 1.20 per euro cap last week, two sources said on Tuesday.

COMAC will continue to manage internal capital of about $150 million, the sources said. A spokesman declined to comment.

For the 10-year old firm, founded by Colm O'Shea, the currency move crystallized problems that were already mounting, another source who knows the fund said.

Impatient with years of poor returns, investors had asked for their money back for some time, the person said, noting that the fund had managed roughly $4.5 billion in late 2012 and that redemption requests had mounted recently.

O'Shea, who had once worked for George Soros the famed global-macro investor, gained attention with a 31 percent return in 2008, when most funds lost money. More recent returns weren't as good. In 2012, the fund lost 9.0 percent and returns for 2013 and 2014 were essentially flat, the person said.

Late last week Miami –based Everest Capital, which invests largely for wealthy individuals and family offices, was the first firm to make headlines when it told clients that it is shuttering its $830 million flagship Global Fund, after the Swiss franc’s sudden surge higher.

Marko Dimitrijevic's Everest had managed $3 billion at the end of 2014 when its main fund had gained 14 percent, far more than the average hedge fund which climbed only 3.3 percent.

But for Everest, COMAC and some other funds that concentrate on big currency, interest rate, and commodity plays, 2015 started with pain that could spread to other asset classes.

"Central banks have compressed risk premia, making risky assets appear safer than they are. When fear (risk) returns to the market, we can see violent adjustments. This can happen to both equity and bond investors, amongst others," said Axel Merk, chief investment officer at Merk Investments.

The franc surged as much as 40 percent to a high of 0.85 to the euro after the Swiss National Bank (SNB) lifted its 1.20-franc cap on Thursday.

COMAC informed investors of its decision to return their money in by letter on Tuesday. "The SNB decision to abandon the currency floor led to the most significant loss of Colm's career and will have a substantial negative impact on the macro fund and firm," a source quoted the letter as saying.

"This leads Colm to conclude that returning capital is in the best interest of investors," the person added.

Editing by Greg Mahlich

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below