Velite To Return $400 Million To Investors

Mar 30 2012 | 12:46pm ET

One booming hedge fund will become a lot smaller on Monday. Velite Capital Management plans to return 25% of its capital to outside investors as the natural gas specialist seeks to avoid harming returns by becoming too big.

Houston-based Velite soared more than 50% last year, pushing its assets to $1.4 billion. This year, it's doing even better, having returned 15% through the first two months of the year despite a difficult climate for commodities hedge funds. The firm currently manages about $2 billion.

And that may be too much for the relatively small U.S. natural gas market, especially as the commodity is trading at its lowest level in 10 years, Reuters reports.

"We have had extensive internal discussions relating to our level of assets under management ("AUM") that we think would allow us to trade most efficiently," fund manager David Coolidge wrote to investors this week. "We feel that this distribution is in the best interests of the fund and its investors. We hope our investors will continue to be supportive of our decision to reduce our AUM."

Coolidge's own capital—estimated at about $400 million—will not be covered by the payout, meaning Velite should shrink by about $400 million on April 2.

In Depth

The Importance of Stability in the Evolving Hedge Fund Administration Market

Oct 5 2015 | 8:17pm ET

Hedge fund administration has evolved from simple record keeping to an integral,...


Citadel's Griffin Reaches Settlement in Contentious Divorce

Oct 8 2015 | 10:14pm ET

Billionaire hedge fund manager Ken Griffin and his wife have settled a long-running...

Guest Contributor

Hedge Fund Marketing To Independent RIA Firms

Sep 30 2015 | 1:56pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth Inc. explains...


Editor's Note