Chriss Is Shutting His $2 Billion Hutchin Hill Hedge FundBy and
Firm didn’t deliver on goals for three years, letter says
Hutchin Hill joins list of hedge funds closing this year
Neil Chriss is shuttering his $2.2 billion hedge fund firm and returning all capital to investors, joining several veteran managers calling it quits this year.
"We have not delivered on our performance goals for three years in a row," Chriss said in a letter to investors dated Nov. 30. "During this period, we sought to adapt and invest in talent and strategies to ensure we had the best team to generate long term results for our investors. We fought hard, but did not deliver the performance that you expected from us."
Hutchin Hill Capital, which invests across markets with teams trading different strategies, is the latest in a stream of firms to close this year. Eric Mindich’s Eton Park, Hugh Hendry’s Eclectica Fund, Whitney Tilson’s Kase Capital Management and Acrospire Investment Management have also shut down. In the second quarter of this year, an estimated 222 funds closed, according to Hedge Fund Research Inc., making it the seventh quarter in a row where more shuttered than launched.
Hutchin Hill lost 5.5 percent this year through mid-November, according to a person familiar with the matter. Last year the fund rose 4.7 percent and in 2015 it was down 5.2 percent, another investor document shows.
Chriss said in the letter Thursday that the firm returned a net cumulative 83.2 percent since it started trading in 2008, and 6.6 percent on an annual basis.
The firm told investors in September that it would disband its credit portfolio to focus on equities, macroeconomic trading and quantitative investing after suffering the largest losses from credit bets in its history. The credit losses were led by North American investment-grade and high-yield debt, primarily among energy and telecommunication companies. They came at a time when all key indicators of the broader market showed gains across the board, with both high-yield and high-grade debt rallying.
At the time of the decision to close the credit portfolio, Chriss said that he estimated a market correction of as much as 35 percent at sometime in the future, and had tuned the firm’s hedges for larger market moves. The S&P 500 index has gained since then.
In today’s letter, Chriss said, Hutchin Hill had to decide whether to continue to run a multi-strategy business with fewer teams, a smaller support staff and less ability to generate profit and losses. Investors will receive their money back by the end of March.
Backed by Simons
Chriss started Hutchin Hill in 2007 with $300 million from Renaissance Technologies founder James Simons, and has a background in quantitative investing. Prior to starting his company, Chriss began the quantitative strategies division at Steven Cohen’s SAC Capital Advisors.
Hutchin Hill, which peaked at almost $5 billion in assets under management, was among the investors that profited from price distortions in the credit default swaps market caused by JPMorgan Chase & Co. trader Bruno Iksil, who became known as the London Whale.
“As for my next steps, I plan to continue focusing my energy on quantitative investing, an area in which I am deeply passionate and have spent the bulk of my career,” Chriss said.
A representative for Hutchin Hill declined to comment.