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Revamped Celtics vs. Struggling Raptors

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James Pallotta, part owner of the Boston Celtics and manager of the Tudor Investment Raptor fund, admitted that he's getting crushed this year in a recent investor letter. The Raptor fund lost $400 million in a few weeks last month and is down 8% for the year. The bum year is an anomaly for the Raptor fund, which opened in 1993 and has an annual return of 19%. Tudor's 4 and 23 fee structure helped earn Pallotta $200 million in 2005.
The Raptor fund is a long/short fund, giving quants a bit of relief as the most mocked fund strategy in the current market. The primary failure of the Raptor fund, according to Pallotta in his letter, was the lack of protection offered by the fund's short book. If both the long and short books of a fund are getting killed, doesn't that suggest a rather improper (or undisciplined) use of the traditional "hedge" structure provided by a long/short fund, even in a down market (or especially in a down market, since you think you'd get extra protection from your shorts)?
The Raptor slide caps a string of recent fund-smacks for Pallotta, who announced he was shutting down his $550 million Tudor Witches Rock Fund in June after poor returns. It is possible that Tudor's winning streak is up, as the firm famously boasts that it hasn't had a down year since its inception in 1980. The Tudor BVI fund lost 3% in July.
Pallotta bemoans an existing or forthcoming recession in his investor letter, and warns of the overall health of investment returns, and Kevin Garnett, Ray Allen and Paul Pierce. If anyone has the letter send it to tips at dealbreaker dot com.
Boston Hedge Fund Star Loses $400 Million [DealBook]