Pennant Capital Management Shuttering $1.5B Broadway Gate Fund

Sep 4 2015 | 5:55pm ET

Alan Fournier’s Pennant Capital Management is shuttering its Broadway Gate fund.

The move, which was revealed in an investor letter this week, cited failure to deliver satisfactority to investors, a need to simplify Pennant’s organization, and a desire to reduce its capital base as reasons for the close. 

The fund, which has approximately $1.5 billion in assets, will close on November 30. Pennant, based in Summit, NJ, manages around $6 billion in total, according to Bloomberg data. 

Broadway Gate was founded in 2008 by Joerg Diedrich and Lee Atzil. The fund merged with Pennant in 2010. Deidrich and Atzil will leave Pennant at the end of September, the letter said. 

Fournier’s $500 million flagship Pennant Fund has returned more than than $1 billion to investors since inception and returned an annual average of 15 percent, according to Bloomberg citing an unnamed investor. Founier has steadfastly kept the Pennant Fund's AUM at $500 million, which he believes makes it easier to trade in undervalued small caps that can generate outsized returns. 

The Pinnacle Fund lost less than 1% in August, sidestepping much of the market swoon that torpedoed many of its peers. Broadway Gate’s August performance was not immediately available, although Bloomberg reports that it was up 5.4% through August.

Investors in Broadway Gate will be able to place a limited amount of their capital into Pennant’s $4 billion Windward fund, which holds many of the same stocks as in the Pinnacle and Broadway Gate funds. 

Fournier founded Pennant in 2001 after working alongside Appaloosa Management’s David Tepper for a number of years, where he managed Appaloosa’s global equity investments. 

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