Pine River to Shut Hedge Fund After Kuhn Reduces Role

  • Clients will have option to invest in firm’s main fund
  • Kuhn said in April he’s stepping back from managing money

Pine River Capital Management is closing its $1.6 billion fixed-income hedge fund after Steve Kuhn, one of its co-managers, announced he was stepping away from managing money, the firm said in a letter to clients.

The eight-year-old fund will be liquidated and cash will be returned to clients, Chief Executive Officer Brian Taylor, whose firm oversees about $13 billion in assets, said in the letter. Investors will be able to put money into the firm’s flagship $3.7 billion Pine River Fund without paying an incentive fee until it surpasses the previous peak value of the fixed-income pool, the letter said.

The fixed-income fund gained about 1 percent in May, paring this year’s losses to 2.6 percent, according to a person with knowledge of the matter. The flagship fund rose about 2 percent last month, leaving it down 1.3 percent year-to-date, the person said.

Kuhn said in April he’s stepping back from his role as money manager and plans to leave the Minnetonka, Minnesota-based firm after eight years to focus on philanthropy. Kuhn said at the time that value investors are having a hard time because clients don’t always have the patience to stick with them when their trades go against them. The three remaining managers overseeing the fund will remain at Pine River, the letter said.

Kuhn remains a partner in Pine River and has not retired, said his attorney Benjamin Plaut.

In recent years, the fixed-income fund had “become more diversified and multi-strategy in nature,” Taylor wrote. “We now believe we can best serve our investors by managing a single flagship multi-strategy fund” rather than simultaneously managing two, he said.

Pine River will also next year spin off its China Fund, which is managed by Dan Li, allowing Li to run his own firm, according to the letter.

Reuters reported the news of the closure earlier Monday. An outside spokesman for Pine River declined to comment.

(Corrects June 6 story to remove erroneous reference to Kuhn retiring. Adds sentence showing that he remains a partner.)
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