Shahraab Ahmad, a credit trader at Hutchin Hill Capital LP who joined the firm at its 2008 inception, is leaving and has mostly completed liquidating his $150 million book.
The 37-year-old money manager “has decided that he intends to retire,” New York-based Hutchin Hill said today in a letter to investors obtained by Bloomberg News. “We are parting amicably, we thank Shahraab for his many contributions to the firm and we wish him the best in his future endeavors.”
Ahmad and his traders began selling positions in corporate bonds and credit-default swaps in May at the $1.1 billion firm founded by Neil Chriss, according to four people with knowledge of the situation.
The hedge fund had sought investors last year for the Hutchin Hill Liquid Credit Master Fund Ltd. that Ahmad was managing, two of the people said. The private swaps market has been shrinking as U.S. rules that seek to curb risk and increase transparency take effect. Mandatory clearing of swaps, in which contracts are processed through clearinghouses and backed by collateral, began in March. A second phase requiring that users including hedge funds start clearing will begin June 10.
Ahmad didn’t respond to an e-mail seeking comment on his departure. Nathaniel Garnick, a spokesman for Hutchin Hill at Sard Verbinnen & Co., declined to comment.
Mark Meenan, a portfolio manager who joined the firm from Anchorage Capital Group LLC, will continue to oversee credit trading for the $1 billion Diversified Alpha Master Fund, Hutchin Hill said in the letter.
Fortune named Ahmad one of Wall Street’s top traders in 2011. The magazine called him an “exceptional credit trader” and quoted an unnamed person who compared his talent with SAC Capital Advisors LP’s Steven A. Cohen.
Hutchin Hill has jumped 10.11 percent this year through the end of May, according to a person briefed on its returns. Chriss, a former Goldman Sachs Group Inc. trader who later managed a portfolio at SAC Capital, started the fund with $300 million from Renaissance Technologies Corp. founder James Simons.
“My strategy does really well in environments where spreads are really wide, when you can find opportunities at distressed valuations, or where spreads are very narrow in which case you get to short opportunities at great valuations,” Ahmad said in a February interview with Bloomberg Brief. “Now I think we’re in sort of a middle environment.”
The extra yield investors demand to hold speculative-grade bonds rather than similar-maturity Treasuries reached 423 basis points last month, the least in more than five years, before climbing to 508 yesterday, according to the Bank of America Merrill Lynch U.S. High Yield Index. Spreads on the debt, rated below Baa3 by Moody’s Investors Service and lower than BBB- at Standard & Poor’s, have tightened from a record 2,182 basis points in December 2008.
The Dodd-Frank Act of 2010 sought to regulate the financial industry after the credit crisis that led to the collapse of Lehman Brothers Holdings Inc. and a U.S. rescue of American International Group Inc.
Gross outstanding credit-derivative contracts have declined 60 percent to $24.8 trillion from a peak of $62.2 trillion in 2007, according to data from the International Swaps & Derivatives Association and the Depository Trust & Clearing Corp.
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