Scout To Close, Return $6.7 Billion

Jan 30 2014 | 3:50pm ET

Hedge fund Scout Capital Management will close after its co-founders decided to part ways.

The shuttering of the 15-year-old New York-based firm comes after co-founder Adam Weiss decided to stop managing client capital. Co-founder James Crichton plans to found a new hedge fund to continue to do so.

Scout will return 95% of its $6.7 billion in assets by the beginning of April, it told investors yesterday. The firm has laid off 23 of its 37 employees, with the rest to go over the next six months as the firm winds down.

"After much soul searching, Adam has decided to step back from the management of outside capital," Weiss and Crichton wrote. "Because James intends to manage outside capital in the future, we have arrived at a crossroads for Scout."

While the two sought to find a way to keep the fund open while changing their roles, "we were unable to come up with an effective plan to manage the existing funds through such a significant change without imposing unnecessary risks upon you," the two wrote. "We are grateful beyond measure for the opportunity you have afforded us to serve you for all these years."

Weiss, who moved to California four years ago for personal reasons, plans to write a book about investing and run a family office. Crichton said his new firm may feature some Scout veterans.

Scout returned 21% last year and has posted annualized returns of 14% since inception in 1999.

Crichton and Weiss met at Donaldson Lufkin & Jenrette. The former had previously worked at Zweig-Dimenna Associates, and the latter at Third Point.


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