John Thaler, founder of JAT Capital, is returning client money to turn his $1.7 billion hedge fund firm into a family office.
“As I approach my 20th anniversary working in the financial services industry, with the last eight spent building and managing JAT Capital, it is the right moment to take a break, spend time with my young family and determine which path to pursue next,” Thaler, 39, wrote in a letter to investors, a copy of which was obtained by Bloomberg.
Thaler started New York-based JAT in 2007 with startup money from Chris Shumway, whom he worked for from 2002 to 2007. JAT’s assets soared to about $3 billion in 2011 when Thaler profited from bets on and against stocks. The equity focused firm, which employs 35 people, plans to return investor money by the end of June, so it can sell positions strategically and prudently, according to the letter.
JAT rose 4.4 percent this year through March, according to a person briefed on the returns, who asked not to be identified because the information is private. Last year, it declined 11 percent after gaining 31 percent in 2013.
Catherine Jones, a spokeswoman for JAT with Polisi Jones Communications, declined to comment on the closing and returns.
Hedge funds have been closing their doors or returning outside capital at a rapid clip as new regulations have increased costs and as industry returns have trailed benchmarks. In 2014, 864 hedge funds closed their doors, according to data provider Hedge Fund Research Inc.
Earlier this year, two hedge funds seeded by billionaire Julian Robertson shut -- TigerShark Management and Tiger Consumer Management. Gideon King decided to close his approximately $1 billion Loeb King Capital Management in January, calling the business of managing hedge funds “cumbersome.”
Allan Teh, founder of Kamunting Street Capital Management, said in April that he would return client money and become a family office citing the difficulty of overseeing money in a zero interest-rate environment.
JAT had $3.5 billion of publicly disclosed U.S. equity holdings at the end of the first quarter, according to data compiled by Bloomberg. The firm’s largest industry positions were in technology and consumer stocks, with the biggest equity stakes in Time Warner Cable Inc., Twitter Inc. and Yahoo! Inc., a regulatory filing shows. It was also a significant shareholder in Madison Square Garden Co.
The filings don’t show non-U.S. securities, holdings that aren’t publicly traded, or cash.
Thaler said in the letter he intends to step back from day-to-day investing for a few months to assess his next steps and that stock picking will remain a central focus of his professional endeavors.