Keel Capital Keels Over

Feb 27 2007 | 11:56am ET

Keel Capital Management, a Connecticut-based equity long/short shop is shutting down this week, citing a lack of attractive short-selling opportunities and a strategy that it described as being “too restrictive,” according to Marketwatch. At its height, the fund managed some $175 million in assets.

According to Keel’s co-founder Jeff Bernstein, the fund has been suffering redemptions because investors are dissatisfied with its sub-par performance. It has had a cumulative net return of 13.8% since inception in early 2005, versus 20% returns from both the Nasdaq Composite Index and S&P 500 Index. As a group, short sellers had a rough go at it last year-- the Barclay Group’s Equity Short Bias Index was down 5.56%.

The firm also stated that its mandate of limiting market exposure and position sizes, as well as avoiding index and exchange-traded funds for hedging, ended up being too restrictive. And rather than changing their strategy to boost returns, Keel’s management decided to pack it in because “a strategy shift would have taken too much time and money,” according to Bernstein.

Keel plans to shut down on Feb. 28 and return 95% of investors' money on March 6. The rest will be returned after a final audit of the fund.

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