Date
27 July 2017
Co-founder Michael Novogratz is taking more direct control of the business after recent high-profile resignations. Photo: Reuters
Co-founder Michael Novogratz is taking more direct control of the business after recent high-profile resignations. Photo: Reuters

Fortress Investment closing part of hedge fund unit

Fortress Investment Group LLC is shutting down part of its hedge fund business that has increasingly become a drag on the company.

It’s selling off all investments it makes in other hedge fund managers through its Partners funds, according to the Wall Street Journal.

The unit was created to emulate the bets of university endowments and other deep-pocketed investors.

At its 2010 peak, it managed US$1.7 billion.

But the Partners funds have slumped in recent years, with money under management shrinking to US$400 million.

The remainder of the Partners funds cash, which is split between other private equity firms and direct stakes in private companies and projects, is likely to be wound down in the coming years, WSJ quotes a person familiar with the matter.

For publicly traded Fortress, the move is another reminder of the struggles it faces in its beleaguered hedge-fund arm, known as the “liquid markets” business, which has already cast off executives and shifted its trading strategies during an extended stretch of poor performance.

The firm’s main macro hedge fund, overseen by co-founder Michael Novogratz, is down 15 percent this year through early September, making it one of the industry’s biggest losers.

Hedge fund unit president Stuart Bohart, who was also co-chief investment officer of the Partners funds, left the firm earlier this month after the exit of macro fund co-manager Jeff Feig earlier in the summer.

On the company’s most recent earnings call July 30, Novogratz said he was taking more direct control of the business.

David Markus, a Fortress executive who helped run the Partners fund under Bohart, will leave as part of the unit’s liquidations.

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