Eisman Shuts Emrys, Says Fundamental Analysis ‘No Longer Viable’

Jul 7 2014 | 9:20am ET

Steven Eisman’s Emrys Partners, launched with great expectations just over two years ago, has closed its doors.

The former star trader at FrontPoint Partners, echoing the concerns of many of his peers, including several others who have thrown in the towel, told clients that the macroeconomic environment made Emrys’ strategy unviable. Certainly, the New York-based hedge fund never managed to attain the heights that Eisman achieved at FrontPoint, where he managed $1 billion and returned 81% in 2007; Emrys had to settle for returns of 2.6% in 2012 and 10.8% last year, badly lagging the broader markets. The fund was down this year.

Eisman shuttered Emrys, which had about $185 million in assets and eight employees, at the end of last month. The closure was first reported by Hedge Fund Alert.

“Making investment decisions by looking solely at the fundamentals of individual companies is no longer a viable investment philosophy,” Emrys wrote in a regulatory filing in May. “While individual company analysis will always be important, the health, or change in health, of the financial system is the starting point of all analysis.”

Eisman, who enjoyed a starring role in Michael Lewis’ best-selling book about the housing bubble, The Big Short, launched Emrys in early 2012 with $22.9 million. He had left FrontPoint a year earlier, as that firm collapsed in the wake of an insider-trading scandal that sent its top healthcare hedge-fund manager to prison. Eisman was not accused of any wrongdoing in that case.

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