Tykhe Funds Down As Much As 31%

Aug 10 2007 | 11:59am ET

The hedge fund investor letter is becoming something of an art form, carefully cushioning the bad news among platitudes like “bad luck” and “unsettled markets,” while carefully laying out how the manager plans to make everything better.

But some numbers are eye-popping enough to defy even the most valiant of artful parsing and phrasing.

So it is with Tykhe Capital: As of the close of business yesterday, its share classes with exposure to its statistical arbitrage and quantitative long/short master funds are down as much as 31% month-to-date. The losses are on top of July’s losses, a 7.9% decline in the firm’s $600 million Tykhe Portfolios Ltd. Fund, and a 4% drop in another $300 million fund.

The fund is not in danger of shutting down, a source told The Wall Street Journal.

“Our performance has been disappointing in the recent unsettled market conditions,” Tykhe wrote its investors. “Although the performance of the different classes of shares and interests differs somewhat, through the close of business on August 9, 2007, we estimate that the net performance for the classes with exposure to the statistical arbitrage and/or quantitative long/short master funds ranges from losses of 17% to 31% month-to-date.”

Tykhe said it had slashed its market exposure to its lowest-ever levels in the troubled strategy and had reduced its leverage to 1x—it was reportedly as much as 4x. The firm has not yet taken the increasingly popular step of suspending redemptions, assuring investors, “We do not anticipate any shortage of liquidity in these master funds.”

TYKHE LETTER TO INVESTORS


In Depth

Q&A: George Schultze On His Fund's Unique Approach to Distressed Investing

Apr 16 2015 | 1:01am ET

George Schultze is a managing member of Schultze Asset Management, a long/short...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Minnesota Supreme Court Rejects The Ponzi Scheme Presumption: Lenders Claw Back Some Of Their Own Rights

Apr 17 2015 | 9:23am ET

A recent court ruling in Minnesota has put an end to the Ponzi Scheme Presumption...

 

Editor's Note