U.S. Markets

Hedge fund Hutchin Hill shuts down after three bad years

BOSTON (Reuters) - Hedge fund manager Neil Chriss said on Thursday he is closing his $2.2 billion firm Hutchin Hill Capital LP after three years of poor performance.

Chriss, whose firm is made up of teams that trade different strategies, wrote to clients that the best way forward is to “proactively return capital as expeditiously as possible.”

“We fought hard, but did not deliver the performance that you expected from us,” Chriss wrote in the letter dated Nov. 30 and seen by Reuters on Thursday.

Hutchin Hill, founded in 2007, is the latest high-profile casualty in the ravaged hedge fund industry. One-time stars Eric Mindich and Richard Perry made headlines when they shuttered their once-prominent firms earlier this year and in 2016, respectively.

“This decision is not about one year of performance, which has been disappointing,” Chriss wrote. “We have not delivered on our performance goals for three years in a row.”

The firm lost roughly 5.5 percent in the January-November period after having been up 4.7 percent in 2016. At one point, the firm managed more than $5 billion in assets.

Chriss had for some time tried to salvage the firm by cutting costs and refocusing resources.

Earlier this year, he began shuttering the firm’s credit portfolio and shifted resources to trading stocks. He also focused more on macroeconomic and quantitative investing. A year ago, Chriss shut the firm’s Hong Kong office.

Despite the efforts, Chriss wrote that it does not make sense to continue with a smaller team and less money under management. He said he expects all investors to get their money back by the end of the first quarter of 2018.

Chriss, who earned a doctorate in mathematics from the University of Chicago, previously worked for Morgan Stanley, Goldman Sachs and legendary trader Steven Cohen’s SAC Capital, where he headed SAC’s quantitative strategies division.

In the letter he discussed Hutchin Hill’s legacy and said he was “extremely proud” of the 83.2 percent net cumulative return his firm returned and its 6.6 percent annual returns.

Hutchin Hill is shutting down just as the hedge fund industry breathes a cautious sigh of relief as many managers are performing better and taking in new money after years of lagging behind stock market gains and taking criticism for high fees.

The HFRI Fund Weighted Composite Index, which tracks hedge fund performance, has gained 7.2 percent in the first 10 months of 2017, marking its best return since 2013, data from Hedge Fund Research show.

Reporting by Svea Herbst-Bayliss; editing by Andrew Hay and Bill Rigby