Karsch Returns Client Capital in $1.8 Billion Hedge Fund

Michael Karsch is returning client money in his $1.8 billion hedge-fund firm after 13 years, saying he wants to take time to contemplate the next stage of his career, according to a letter sent to investors.

Karsch, 45, plans to return 95 percent of client assets in New York-based Karsch Capital Management LP by Sept. 30 and the remainder no later than January, according to the letter, a copy of which was seen by Bloomberg News.

“I feel as I approach twenty years as an investment manager, it is time for me to take a step back, reflect on my experiences and begin to think about the next chapter of my career,” Karsch wrote in the letter, dated today.

Karsch founded his firm in 2000, after stints as a managing director at Soros Fund Management LLC and an investment role at Chieftain Capital Management Inc. Karsch Capital, which manages about $1.3 billion in stock hedge funds, has outperformed the Standard & Poor’s 500 Index by 100 percentage points with its main fund, according to the letter.

Shawn Pattison, a spokesman for Karsch at Abernathy MacGregor, declined to comment beyond the contents of the letter.

Karsch Capital’s main fund returned 6.1 percent this year through Aug. 23. A long-only fund, which manages about $500 million, returned 16 percent. Since its inception in 2006, that fund has returned 94 percent, compared with 55 percent for the S&P 500, according to the letter.

Karsch started his career as an investment banking analyst at Wasserstein Perella & Co. He graduated from Tufts University in 1990 and has a masters from its Fletcher School of Law and Diplomacy as well as an MBA from Harvard Business School.

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