Easy come, easy go.
Robert Citrone’s Discovery Capital Management is the latest high-flying hedge fund firm to suffer major redemptions.
The South Norwalk, Connecticut–based Tiger Cub posted a large asset decline following two years of negative returns, though the asset declines were not large enough to account for such a big difference. Discovery reported having $11 billion in assets as of the end of 2015. This is down 25 percent from $14.7 billion the previous year. The firm managed $15 billion at the end of 2014, when it had nearly doubled assets over the previous year.
In 2015 the macro hedge fund firm’s Discovery Global Opportunity Fund fell by just 0.57 percent, while the Discovery Global Macro Fund slipped 5.81 percent, according to a hedge fund database.
These declines came one year after the two funds declined by 3.17 percent and 8.21 percent, respectively.
While macro funds have not fared too well in recent years in the generally low-interest-rate environment, Discovery did worse than other well-known macro firms. For example, in each of the two previous years, Paul Tudor Jones II’s Tudor BVI Global Fund, managed by Greenwich, Connecticut–based Tudor Investment Corp., and Louis Bacon’s Moore Global Investments, managed by New York–based Moore Capital Management, each posted low-single-digit gains in 2014 and 2015.
On the other hand, Alan Howard’s Brevan Howard Master Fund, managed by London-based Brevan Howard Asset Management, lost money in each of the two previous years. The fund slipped 1.85 percent last year and less than 1 percent in 2014.
Discovery’s funds got off to a rough start last year when they suffered losses on a big negative bet on the Swiss franc when the Swiss National Bank decided to let the franc float freely in the currency market after three years of carefully capping its trading range.
The Discovery Global Opportunity Fund moved into positive territory in July 2015 from gains across a variety of strategies, especially long-short equity stock-picking in both developed and emerging markets. In fact, the fund was positive as late as November but suffered a 1.6 percent loss in December, putting it slightly negative for the year.
Citrone was formerly head of emerging markets at Julian Robertson Jr.’s Tiger Management Corp. He founded Discovery in 1999.
Citrone earned $250 million in 2012, qualifying for the Rich List for the first time. He then made $475 million in 2013 after Discovery Global Opportunity Fund posted a 27.53 percent gain and Discovery Global Macro Fund gained 26.93 percent. Discovery then started 2014 with $15 billion, nearly double the prior year’s total, with about $3 billion coming from new investments.
