Shumway Capital Partners notified investors late last month that it will return capital in cash by the end of March. Despite telling investors in early February of his decision to return outside capital, Chris Shumway did not let them know when or how their investments would be redeemed, fearing that competitors could profit from this information.
The recent announcement should alleviate investors’ concerns that the firm’s long-term private investments could have been locked up for an extended period of time. Those investments include an $8 million stake in Facebook.
While they wait for the funds to be liquidated, investors are also evaluating potential spinouts from Shumway. Chris Shumway is preparing a seeding platform with up to $800 million of his own capital, as well as money from family and employees who will remain at the firm, which may invest in some of these spinouts. Wrote Shumway in his last letter to investors, dated February 4, “While a number of new funds have already come out of SCP alumni, I hope and expect to see more new businesses spawn out of our team.” Among names being touted as potential launches is Tom Wilcox, the firm’s former head of equities.
It has been a rocky few months for the firm, starting when Shumway first communicated his desire to step back from his role as chief investment officer and pass the baton to Wilcox.
“After the recent and poorly communicated switch giving up the CIO role, we drilled down to find out the scoop,” said one Shumway investor. “Chris convinced us that, no, he’s not ‘stepping back,’ but focusing on the big picture, macro issues that are so important to their process and that add great value. So imagine our confusion when we got the latest news.”
Shumway was forced to write another letter a mere two weeks later assuring them that he was still very much committed to the success of the firm, but after receiving redemption requests that totaled 40% of the firm’s $8 billion under management in January, Shumway threw in the towel. Shumway’s assets peaked at $8.5 billion last summer.
