Scottwood To Return Outside Capital

Aug 10 2011 | 12:24pm ET

Another hedge fund manager is abandoning the vagaries of managing outside money for the peace of mind of running a family office.

Scottwood Capital will return almost all of its outside capital, some $470 million, at the end of the month. Then, like the founders of Soros Fund Management, Duquesne Capital Management, Shumway Capital Partners and Icahn Associates before him, Scottwood founder Edward Perlman will turn the firm into a family office.

Perlman told investors last month that he planned to stop managing client capital. According to Hedge Fund Alert, he then began liquidating Greenwich, Conn.-based Scottwood's positions, leaving the firm entirely in cash by the beginning of August.

Perlman blamed increased risks in the credit markets and regulatory uncertainty for his decision. But he also seemed exasperated by the vicissitudes of investors who pulled money from the fund when it did poorly and plowed it back in when fortunes reversed.

Scottwood's clients used the fund "like an ATM" in 2008 and 2009, Perlman complained, slashing its assets from almost $1 billion to less than $250 million, and then returned in droves after the hedge fund posted a 45% gain in 2009.

But investing in Scottwood, which Perlman, a former Bear Stearns trader, founded in 2001, has not been a smooth ride. The fund—which will end life having returned an impressive 11.7% on an annualized basis—plummeted in 2008 before turning things around in 2009 and early 2010. But after rising 20% through April of last year, Scottwood went back into a tailspin, losing 6.6% on the year.

This year, the fund was back on the upswing, rising 1.8% through the end of last month.


In Depth

Whisky Business: The Ultimate Liquid Alternative Investment

Sep 15 2014 | 7:02am ET

David Robertson knows his single-malt whisky—he was the Master Distiller at the...

Lifestyle

Hedgies Rock Out For Children's Charity

Sep 15 2014 | 8:40am ET

It's that time of year again—when hedgies trade in their spreadsheets for guitars...

Guest Contributor

The Cult of Loss Aversion: A Call to Rethink Risk in Global Macro Investing

Sep 4 2014 | 5:45am ET

In the wake of a traumatic loss, whether it is financial or personal, it is just...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

In search of the ‘new normal’ at the Fed

The Federal Reserve keeps baby-stepping toward a “normalization” of monetary policy. But just what is normal?

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.