Moderate returns and partner squabbles drive shutdowns

Tue Feb 1, 2005

But fund failures are expected to increase after a benign year in 2004

Al Vinjamur seemed to have done everything right. He spent 11 years as a statistical arbitrageur at Steve Cohen's SAC Capital Management, one of the most influential names in the hedge fund industry. He took his time assembling an investment team and developing fresh trading programs for his new firm, Lotus Partners, and made a commitment to limit his start-up capital to about $200 million.

But, within days of launch, his carefully laid plans started to unravel. For starters, Vinjamur was launching a strategy that had been doing poorly in recent years, and investors contributed only about $40 million of start-up capital. Then he lost about 0.6% during his first month of trading in August, and made the remarkable decision to shut down the fund and develop a new program before launching another. He even used his...

ISSN: 2151-1845 / CDC10004H

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