Ex-Guggenheim Hedge Fund Deimos Asset Management to CloseBy
Firm cites fundraising enviroment for hedge fund managers
Sees ‘little visibility as to when conditions will improve’
Deimos Asset Management, the multistrategy hedge fund that was previously housed within Guggenheim Partners, is closing its doors less than two years after its inception, citing a difficult fundraising environment.
“Despite our many successes -- including minimal drawdowns and our profitability on a performance basis for the year -- we have decided to cease the investment management side of the business,” Loren Katzovitz, managing partner at Deimos, said in a statement.
The fund began in early 2015 with an anchor investment from Ontario Teachers’ Pension Plan through a managed account platform and a strategic investment from Ares Management LP. It is working to return all funds to the Canadian pension and will move infrastructure, technology, operational aspects -- as well as some staff -- to Ares, according to Katzovitz. Deimos has seven teams of money managers and as of June oversaw about $350 million in assets, including leverage, according to a regulatory filing.
Deimos was started when Guggenheim sold a fund to a group including the former co-head of Royal Bank of Canada’s capital-markets division, Mark Standish, and ex-managing partners of the Guggenheim Global Trading alternative investment management business, Katzovitz and Patrick Hughes. The firm quickly brought on other managers, but struggled to gather sufficient assets amid a broader investor flight from hedge funds.
“The current fundraising environment has been one of the most challenging in history for hedge funds overall, and there is little visibility as to when conditions will improve,” said Katzovitz. “Due to these factors, the overhead for running an institutional-quality fund like Deimos has simply become too high, so we have decided to return capital to Ontario Teachers’ and stop managing funds.”
Among the money managers brought on by Deimos was Paul Orwicz, a former Point 72 Asset Management and SAC Capital money manager, who focused on technology, media and telecommunications investments. Jon Withaar and Steve Deitch of Brasidas Capital Advisors joined to focus on Asia-focused event-driven investments, and Slotnik Capital Management CIO Charles Slotnik was hired to focus on event arbitrage. In September 2015, the firm added former Citadel money manager James A. Warner to build investments in the financial services sector.
In an interview in December, Standish said the fund had planned to add between three and five manager teams by the end of March. Deimos was seeking global equity managers focused on energy and consumer sectors, as well as market-neutral quantitative managers to handle investments in its multistrategy fund, he said.