In a letter sent this week, hedge fund manager (and former co-head of proprietary currency trading at Goldman Sachs) Christian Siva-Jothy informed investors that he would be shutting down his firm, SemperMacro, due to poor performance (the fund is down 2.3 percent year to date, and lost 8.7 percent in 2010 and 27 percent in 2009). He also made some truly disturbing statements.
“In this business you are only as good as your last few trades,” Siva-Jothy wrote. “Mine have not been very good. Whether I have lost my edge or simply need a break after 23 years I am not sure, but I certainly hope it is the latter.”
What the...? But wait...doesn't he...doesn't he know? How you're supposed to do this? It's almost as though SJ missed the class in hedge fund school on what to write in down months and/or when informing investors of a shuttering. If he hadn't surely he would've known that deflection of responsibility + rationale for losses is essential. Whether you're down by nine percent or ninety-nine, you never, ever take blame for this kind of stuff. These are the people you're going to turn to when you restart your fund under a new name and you can't have them asking questions like "why should I give you my money when by your very own estimation you suck at this?" Rather, you tell them that the losses were no fault of your own but were due to, say, “the market’s ridiculous mispricing of equity” and not your analysis, which was solid. In fact, since we've been asked our opinion, we're just going to recommend right now that SJ send a follow up letter asking investors to disregard his previous missive and suggest by stating outright that he hasn't lost his edge- it's simply yet to reveal itself. And when it does- do yourselves a favor and buckle up.