$21 billion hedge fund BlueMountain Capital is axing its long-short equity fund after only 2 years and firing several portfolio managers

$21 billion hedge fund BlueMountain Capital is axing its long-short equity fund after only 2 years and firing several portfolio managers


Andrew Feldstein co-founded BlueMountain in 2003.

Thomson Reuters

  • BlueMountain Capital is ending its long-short equity strategy, a source close to the firm tells Business Insider, only two years after starting it.
  • The firm is firing several portfolio managers on the equities team after recruiting talent from hedge funds like Leon Cooperman’s Omega Advisors and Citadel alum Anand Parekh’s Alyeska Investment Group over the last year.
  • The firings are not related to the firm’sdecision to double down on its bet on troubled California utility company PG&Ein November, the source tells Business Insider.

$21 billion hedge fund BlueMountain Capital Management is closing its long-short equity fund in an effort to shift just two years after launching it, a source familiar with the situation tells Business Insider.

As a result, four equity portfolio managers were fired this week, several sources tell Business Insider.

BlueMountain recruited several money managers from other funds as it restructured its equity business in 2018, including Mahmood Reza from billionaire Leon Cooperman’s Omega Advisors to make investments in financial companies and Sanket Patel from Citadel alum Anand Parekh’s Alyeska Investment Group to manage energy investments.

BlueMountain put Lance Rosen, the former president and CIO of Kinrose Capital, in charge of its equities strategy in July 2017 and promoted Jared Gould from senior analyst to portfolio manager in early 2018 as well.

As of September 2017, the long-short strategy managed around $1.2 billion, according to a regulatory filing. It remains unclear how the group’s assets have changed since then.

“As a multi-strategy asset manager, we regularly expand our range of investments with new strategies that leverage our capabilities, address our clients’ needs and expectations, and adapt to changing markets,” a BlueMountain spokesman said in a statement. “Our continued focus is on the strategies in which we think we can be distinctive and have the most conviction, therefore, we have decided to discontinue our sector-based long-short equities strategy, as it is configured now. We will continue to invest in equities through a number of our other strategies, including distressed, systematic, merger arbitrage, and special situations.”

BlueMountain was launched as credit shop in 2003 by co-founders Andrew Feldstein and Stephen Siderow but has added several strategies to its offerings, including systematic equity and collateralized loan obligation arms.

The termination of the strategy and the subsequent firingsare not related to the firm’s decision to double down on its earlier bet on troubled California utility PG&E, a source close to the company tells Business Insider. It was reported earlier this month thatPG&E may consider filing for bankruptcydue to the billions in liabilities it faces following the deadly California wildfires.

In a December letter to investors, BlueMountain put its target price on PG&E’s stock at $59.10 a share and wrote that insured losses against the company were “overstated.” The utility’s stock opened Friday trading at $17 a share.

2018 was a very tough year for hedge funds broadly, with a surge in poor performance and a string of high profile shutdowns. Billionaire hedge fund managerDavid Einhorn posted his worst year ever, andDan Loeb’s Third Point also struggled.

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