Running a hedge fund certainly has its rewards; just ask DavidTepper. But it’s also a tremendous pain in the ass, between the endless hours trying to find an edge and the whiny investor for whom it is never good enough. So eventually, the time comes when the hedge fund manager, to paraphrase Leon Cooperman, has wasted enough of his life in the endeavor. That time has come for Boston-based Highfields Capital Management’s Jonathon Jacobson, and without so much as a scratch on a valet’s face.
“Done correctly, money management is an all-consuming, 24/7 pursuit… After three-and-a-half decades of sitting in front of a screen, I realized I am ready for a change,” Mr. Jacobson, 57 years old, wrote. “The tell was that I simply could not pull the trigger on making a multi-year commitment to a few potential key hires….”
“Our 2018 results and those of the last few years have clearly not met either my expectations or yours,” wrote Mr. Jacobson in the letter. “While it has been, and continues to be, a very treacherous investment environment, and certainly not one very friendly to our style of investing, it is what it is, and no one feels worse about our lagging performance than I do.”
Ah, yes, there’s always that, too. And it’s especially galling when that performance lags because investors are impatient children. Such is the reasoning behind San Francisco-based Criterion Capital Management’s decision to throw its clients’ money back in their faces.
Criterion said it would prefer to invest over a longer time period, from three to ten years, and hinted at the possibility of a future investment firm. “We feel compelled to realize our full potential as investors in a different construct,” Criterion said in its letter. “Rather than impose a new framework on our valued investors, we... have decided to wind down the Funds while we formulate the next chapter.”
In its letter, Criterion cited examples of bets that didn’t pan out in the short term. The firm said its early bets on Amazon.com Inc., Netflix Inc., Salesforce.com , and Tencent Holdings Ltd. faced significant drops “or long periods of relative underperformance before the scale and profitability of their business models became apparent to the market. This is why we are certain the real leverage in our experience and expertise occurs over three, five and ten year investment time frames.”