Weinstein’s Saba Loses Investors as Hedge Fund Posts Drop
Boaz Weinstein, founder of hedge-fund firm Saba Capital Management LP, lost 1.3 percent in June, his fifth straight monthly decline, as some investors pulled money.
The credit fund has lost 2.9 percent this year after dropping in the prior two years, according to an investor letter. Saba’s assets shrunk to $2.6 billion from $3.1 billion in the prior month and are down from a peak of $5.5 billion two years ago.
Weinstein, the former co-head of Deutsche Bank AG’s credit business, started Saba in 2009 and initially profited from wide swings in market prices. The firm has struggled since mid-2012 as central bank intervention in global markets has damped volatility. The investment committee of New Mexico’s public employees pension fund voted last month to pull $43.5 million from Saba, citing an inability to make money in a low-volatility environment, a person with knowledge of the decision said at the time.
Jonathan Gasthalter, a spokesman for New York-based Saba at Sard Verbinnen & Co., declined to comment on the returns.
The calm that has pervaded markets ebbed this week after a parent company of Portugal’s Banco Espirito Santo SA missed short-term debt payments. The VIX (VIX), a measure of expected volatility, rose 8 percent yesterday to 12.6 after falling to 10.3 on July 3, the lowest since February 2007. That compares with an average of about 20 over the past decade.
The $2.7 trillion hedge-fund industry posted gains of 1.1 percent in June, the biggest monthly advance in almost a year. Managers are up 2.5 percent for the first half of the year, according to the Bloomberg Global Aggregate Hedge Fund Index. Funds betting on credit arbitrage have gained 7 percent in the period.
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