Cooper Hill Shutters Hedge Fund, Blames Poor Performance

Oct 2 2007 | 6:00am ET

Credit-focused hedge funds are not the only ones feeling the heat in the current market environment: New York-based Cooper Hill Partners, a $300 million healthcare hedge fund shop, has decided to close its doors.

Since inception more than 10 years ago, the firm’s funds have trounced the Nasdaq Biotech Index and the Russell 1000 Healthcare Index, with annualized returns of 26.1% through August. But 2007 has not been kind: Through Sept. 11, the firm’s CLSP, CLSP II and CLSP Overseas funds are down 10.9%, 10.8%, and 10.3% respectively year-to-date. All three funds are estimated to be down 1.5% in September.

“Our poor performance this year generated significant withdrawals, with redemptions of roughly 15% of assets in the September quarter-end, constraining our ability to fund and execute on our fundamental investment ideas,” said Alexander Casdin, portfolio manager, in a letter to investors. “The decline in our assets has caused a significant strain on our infrastructure that was built for a much higher asset base. The volatility caused by our down performance combined with our heightened awareness of the funds’ quarterly liquidity detracted from our goal of finding and maintaining significant positions in winning multi-year ideas.”

“In short, we were faced with a situation where we could not guide for the long term while looking in the rearview mirror,” he added. “I strongly believe that it would not be fair to maintain the funds if we cannot execute our strategy to generate optimum performance.”

Going forward, Casdin said the outlook for healthcare is bright and that there are big fundamental opportunities and significant value and will continue investing his personal money in the sector.

A source close to the firm said investors have already received 95% of their capital back with the remaining balance to be redeemed by year-end.

Casdin’s father, Jeff Casdin, founded the firm in 1997 with $12 million in assets under management.

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