David Stemerman Shuts His Hedge Fund to Explore Run for Connecticut GovernorBy
Conatus manages $1.6 billion, down from $2.3 billion at start
Flagship fund gained 18% this year; media fund up 24%
Hedge fund manager David Stemerman is closing his Conatus Capital Management after a decade to explore a run as the Republican candidate for governor of Connecticut.
“As Conatus approaches the end of its tenth year, I have decided to pursue an opportunity in public service and will be winding down the firm in December,” he wrote in a letter to investors. “As I begin to evaluate the opportunity to serve as Connecticut’s next governor, I expect to form a candidate committee that will prepare to launch a campaign in 2018.”
Conatus, which now manages $1.6 billion, was the biggest start-up of 2008, when Stemerman, an alumnus of Steve Mandel’s Lone Pine Capital, raised $2.3 billion. Since inception through last month, his annualized return was 5.4 percent. His flagship fund has returned 18 percent this year, while his media disruption fund, which he started in April, climbed 24 percent.
The manager said he will back a fund run by Amir Mokari, his consumer sector head. Stemerman will invest most of the money he now has in Conatus in the new firm and also take a passive stake. Mokari’s firm will invest in consumer, technology, media and telecommunications stocks and is expected to open in January.
Stemerman, 48, also used his client letter to make a political statement about his home state: “Connecticut -- home to my family and business -- is in crisis,” he wrote. “I believe that too many of our leaders do not understand the challenges we face, nor do they have a strategy for the path forward. I am deeply concerned that a small number of people in our state are thriving while many are struggling to make ends meet. ”
Connecticut Governor Dannel P. Malloy, a Democrat, has decided not to seek reelection to a third term and the race to replace him is expected to draw a long list of candidates.
Conatus will return 95 percent of client money by Dec. 22, with the balance coming after a final audit.