NEW YORK (Reuters) - Glade Brook Capital Partners LLC is shutting its original hedge fund in favor of a new series of vehicles focused on big bets in public securities, it said in a letter to investors on Tuesday.
The change comes as the hedge fund has lost about 8 percent so far this year, after an average annual gain of about 8 percent since inception in 2011. The fund’s assets peaked at about $900 million in 2014, but have declined as the firm has increasingly focused on private companies.
Glade Brook’s new funds will focus on a very small number of investments in publicly traded companies, an unusual approach among hedge funds, which tend bet on a wide range of securities, a source familiar with the situation said.
The first new fund, GB Special Opportunities Fund LLC, is expected to have more than $200 million at launch in early 2017 based on current commitments, said the source, who requested anonymity because the information is private.
“Our new, more opportunistic approach to public markets investing will enable us to better capitalize on big investment ideas by focusing our efforts and tailoring each fund to a specific investment program and the needs of our clients,” founder and Chief Investment Officer Paul Hudson wrote in the Nov. 29 letter, a copy of which was seen by Reuters.
“Just as importantly, it will also enable us to be patient and refrain from deploying capital when the ‘fat pitch’ public market opportunities are not there.”
Glade Brook, whose private investments include Snapchat Inc, Uber Technologies Inc [UBER.UL], AirBnB Inc and Honest Company Inc, manages about $1.2 billion with about $200 million in its public equity-focused hedge fund.
Hudson, formerly headed communications, media and entertainment investing at Shumway Capital Partners, launched Glade Brook as a hedge fund to invest in public technology, media, telecommunications and consumer companies. Starting in 2012 with a private investment in Alibaba (BABA.N), the Greenwich, Connecticut-based firm gradually changed its focus to betting on growing, non-public companies through private equity-style funds.
Glade Brook’s new Special Opportunities Fund will focus on ideas and themes from its investments in private firms as they transition to public companies, according to the letter.
The fund will be a so-called “long-only” fund, meaning it will not hedge its portfolio by shorting stocks, a bet against their value.
Reporting by Lawrence Delevingne; Editing by Lauren Tara LaCapra and Richard Chang