Cadogan Closes, To Merge With Cantor Fitzgerald

Dec 9 2011 | 11:44am ET

Fund of hedge funds Cadogan Management has decided to close its doors and transfer its employees and operations to investment bank Cantor Fitzgerald.

Cadogan, which spun off from Fortis Bank's asset management unit just two years ago, is the victim of investor redemptions earlier this year. The firm added that the redemptions, and the concerns they produced in continuing investors, forced it to face "a difficult environment" for hedge funds.

"The lack of clear governmental leadership and direction makes many global macro and CTA strategies tricky as well," the firm wrote to investors. "The current low level of corporate defaults tends to limit new distressed opportunities. Low spreads on plain vanilla deals and reduced activity in M&A generally limit interest in risk arbitrage and many event strategies. We believe investors should be looking at hedge funds in the short run more in terms of risk mitigation than upside capture."

Looking to hedge funds, but not to Cadogan. "The redemptions were not sufficient to destabilize our portfolios," the firm wrote, but "they did destabilize the perception of many of our clients and their advisors. In spite of what has been acknowledged to have been very candid and clear communication on our part, we were unable to fully overcome the concern of enough of our investors with regard to being the last investor in any of our funds."

New York-based Cadogan's team and remaining products will now move to Cantor, which Cadogan selected "after a series of very interesting and productive discussions with a variety of top-quality industry participants."

Cantor "has yet to fully break into the asset management business but appears to have a desire to do so and their ability to acquire a top quality team was a good solution for them, our professionals and potentially our clients as well."

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