| Mindich: “Disappointed” |
Eric Mindich’s $11.8 billion hedge fund firm, Eton Park Capital Management, is relaxing its restrictive liquidity terms and cutting emerging markets investments. Founding partner Edward Misrahi, who led the emerging markets team, has left the firm. The firm’s flagship fund (onshore) fell 11.15 percent in 2011, leaving Mindich “very disappointed.” It has come back this year, gaining 5 percent net of fees through April, but that wasn’t enough to prevent changes, especially around how quickly investors can take out their money. “We have been giving careful consideration to improving the liquidity we offer to our investors,” said a May 8 Eton Park letter to investors. “We have decided to eliminate the three-year [rolling lockup] feature of our current structure. As we have invested through various market cycles, we have concluded that we can pursue our long-term investment program without relying on this feature.”
Eton Park also said it will eliminate mandatory side pockets. “Investors will not be obligated to participate in new side pocket investments (other than as may be required to protect investors’ interests),” said the letter. “We believe that these changes will provide investors with greater flexibility in managing their liquidity needs.” Mindich echoed those changes at an investor meeting in New York City on May 10, according to two people in attendance. Eton Park also announced it would pull back on its emerging markets investing. “One continued challenge for us . . . has been
the performance of our emerging markets public portfolio, which year-to-date has generated a gross loss of 2.4 percent, while the rest of the portfolio has generated a gross gain of 9.2 percent,” said the letter. “On the back of a disappointing 2011 for emerging markets public investing, we have made the difficult decision to wind down our dedicated public emerging markets effort.”
Eton Park managed about $652 million gross in dedicated emerging markets funds as of year-end, according to its most recent Securities and Exchange Commission filing. The strategy also hurt the flagship multistrategy fund: In 2011, 6.1 percent of 8.7 percent gross losses came from emerging markets excluding China, according to an investor. The firm also said it would stop making new private investments in emerging markets and that Misrahi, who was responsible for emerging and European markets, was leaving the firm along with several undisclosed team members. Eton Park managed $14 billion as of July 1, 2011, but the poor performance and redemptions reduced that to $11.8 billion as of December 31. Eton Park is raising money for a positively performing EP Credit Opportunities Master Fund, which seeks to take advantage of openings in structured credit. A spokesman for Eton Park declined to comment.
