Saturday, 20 December 2014
Last updated 17 hours ago
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.
Dec 1 2014 | 10:21am ET
As 2014 winds down, Northern Trust Hedge Fund Services executives took some time to share their outlook on trends facing the industry in 2015. Read more…
Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.