- Team led by Jacky Cheung traded emerging market currencies
- Group ran money solely allocated from other Pine River funds
Pine River Capital Management, the hedge-fund firm with about $15.4 billion in assets worldwide, cut a Hong Kong-based team that traded emerging-markets currencies, according to people with knowledge of the matter.
The four-person team led by Jacky Cheung used the Quantitative Relative-Value strategy to trade currencies, said the people, who asked not to be identified because the decision is private. The group, whose members joined the firm between 2012 and 2013, ran money allocated from other Pine River funds and didn’t have a stand-alone pool with assets raised directly from outside investors, the people said.
Shocks to currency markets, including the removal in January of the Swiss franc’s exchange rate cap against the euro and China’s first major devaluation of the yuan since 1994 in August, have roiled hedge funds worldwide this year. Brazil’s real depreciated more than 30 percent to become the worst-performing major currency this year as most emerging-markets currencies weakened on the end of the commodities super-cycle, China’s economic slowdown and reduced appetite for risky assets.
Pine River’s regulatory licenses of the four employees on the team were terminated in early September, according to information posted on the website of Hong Kong’s Securities and Futures Commission. They include Cheung, a former proprietary trader at Credit Suisse Group AG, and Peyron Law, Ye Tingsong and Tommy Jim, according to the SFC website. While the team focused mainly on the emerging markets, it also traded some currencies from the Group of Ten nations.
Patrick Clifford, a spokesman for Pine River with Abernathy MacGregor Group Inc., declined to comment.
Hedge-fund firms have a history of trimming non-core businesses amid volatile markets. Fortress Investment Group LLC in the first quarter decided to shutter a stocks team at its Logan Circle Partners division, which traditionally focused on bonds.
Pine River, based in Minnetonka, Minnesota, profited from bets on mortgage-backed securities after the financial crisis in the U.S. and its bets on U.S. home-loan bonds fueled the second-best hedge fund performance in 2012 in a Bloomberg Markets magazine ranking. The firm has thrived on relative-value trades that seem to profit from valuation discrepancies of related securities without wagering on market direction.
The firm has had an Asia fund since 2004, which focuses on convertible arbitrage. Pine River, which has offices in Asia in Hong Kong, Beijing and Shenzhen, started a China fund in 2013 that oversees about $1.2 billion.