York Capital Management, the New York multistrategy and event-driven firm headed by James Dinan, has posted a sharp decline in assets, making it the latest long-established hedge fund firm to suffer billions in investor redemptions.
York disclosed in a regulatory filing that its assets under management declined by $3.3 billion in the first six months of this year, from $22.3 billion to $19 billion. Of that decline, more than $2 billion is a result of redemptions.
In addition, two of York’s biggest funds are down this year. York Capital Management LP, its $4 billion multistrategy fund, declined 3 percent through August after dropping 14 percent in 2015. The $4.5 billion York Credit Opportunities Fund fell 1.7 percent through August after declining 7.8 percent last year. York also suffered a setback earlier this year when partner Michael Weinberger, who had spent nearly 16 years with York, left to launch his own fund. The firm declined to comment.
Dinan launched York in 1991 after serving as general partner at New York risk arbitrage firm Kellner DiLeo & Co.
York has faced tough times before, with its funds falling about 26 percent on average in 2008. But they bounced back in a big way the following year, rising about 40 percent on average. That year the York Select Fund gained 83 percent, while York Global Value rose 60.62 percent.
York did not gate or suspend redemptions in 2008, and the firm finished the year down by more than $5 billion in assets. But during 2009, assets rose 42 percent, to $11.1 billion.
In 2010, Credit Suisse bought a 30 percent stake in York for $425 million. York’s assets peaked at $22.8 billion at the end of 2014, up 30 percent from the previous year, even as its major funds posted single-digit gains.
York’s asset decline this year reflects a wider trend in the hedge fund industry. In the past year or so, many of the old-line hedge fund firms whose stellar long-term records have contracted somewhat have seen billions of dollars withdrawn by increasingly impatient investors.
They include firms run by some Alpha Hall of Famers, such as Paul Tudor Jones II’s Greenwich, Connecticut–based Tudor Investment Corp.; Richard Perry’s New York–based Perry Capital (which announced Monday it is winding down its flagship hedge fund after 28 years); and Leon Cooperman’s New York–based Omega Advisors (before the Securities and Exchange Commission charged Omega last week with insider trading and other securities violations) as well as Daniel Och’s New York–based Och-Ziff Capital Management Group and Alan Howard’s St. Helier, UK–based Brevan Howard Capital Management. Entering this year, York, Och-Ziff and Brevan Howard all ranked among the 23 largest hedge fund firms in the world, while Tudor ranked No. 46.
Investors, who are unhappy with hedge fund performance in general over the past few years or so, are sending the message that they don’t care who you are, what your reputation is, how long you have been in the business or that you once generated huge, outsize returns. They mostly care about what you have done for them lately. And if the answer is not much — or if you lost money — they will pull out of your funds. It’s sort of like coaches in the major leagues benching or demoting onetime superstars whose batting average has sagged heavily.
Now, not all is wrong with York. Several of its other funds are actually making money this year. Its $3.5 billion York European Opportunities Fund had gained 2 percent through August, while its much smaller York Global Credit Income Fund had returned 10 percent.
Still, the pressure is on York to pull its largest funds back into positive territory and above their high-water marks before more investors lose their patience.
