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

An Interview With Harvest Volatility Management's Rick Selvala

Mar 23 2017 | 5:39pm ET

Several years of extremely low interest rates have pushed some investors into equities...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

SEI: Private Debt Coming Into Its Own

Mar 8 2017 | 9:24pm ET

The explosive growth of private debt over the past few years has caused the lines...

 

From the current issue of