Hedge fund White Elm to shut down, posts double digit returns

[BOSTON] Hedge fund White Elm Capital is returning money to outside clients at the end of the year, ending a 12-year run of picking stocks for pensions, endowments and wealthy families, its founder, Matthew Iorio, wrote in a letter on Friday.

Mr Iorio, whose fund is having one of its best years ever with a nearly 30 per cent gain after fees, said it was the right time to end.

He called the decision "very difficult" but said he was "happy to be returning capital when we are performing at the top of our game".

Mr Iorio will continue to invest and convert the hedge fund into a family office, an entity that generally invests one or several families' fortunes.

Reuters saw a copy of the letter. A spokesman for the firm declined to comment beyond the letter.

White Elm is the latest in a growing number of hedge funds to shut down as raising and retaining capital and running a hedge fund is becoming more difficult.

Last month Louis Bacon, one of the industry's best known managers, said he would stop investing outside money in his Moore Capital Management after 30 years in the business.

White Elm's outside investors will get most of their money back by the end of January 2020, the letter said, adding that all current clients have earned money with White Elm.

The firm, which traces its roots to Tiger Management, one of the industry's most successful funds ever, was launched in 2007. It managed more than US$1 billion in assets at its peak and has seen returns go up and down. At the end of 2018, the firm oversaw US$328 million in assets, according to a regulatory filing.

Returns have been strong recently, with gains averaging 15 per cent a year as bets on financial and business services companies and technology firms paid off.

White Elm's most recent regulatory filing shows that the firm owned stakes in TransDigm Group, Visa, Mastercard and Autodesk at the end of September.

This year, the fund has gained 28.73 per cent through the end of November, beating the average hedge fund's 8.6 per cent return, according to Hedge Fund Research data.

Mr Iorio wrote that he wanted to deliver long-term returns that beat the broader market and "we have achieved what we set out to do".

Before opening his own firm, Mr Iorio, 49, worked at Lone Pine Capital, a hedge fund founded by Stephen Mandel, who got his start at Julian Robertson's Tiger Management. White Elm is often called a Tiger Grand Cub.

REUTERS