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Atticus Capital Hedge Fund Notes - Exclusive

Atticus Capital

Atticus Capital Hedge Fund Notes

Atticus CapitalRecord losses is not exactly what most hedge funds are seeking to be known for right now. Anyone keeping up with manager developments right now know that many managers are struggling. Some reports say 2008 is shaping up to be the hedge fund industry's worst performance in 18 years. On some level this is needed, just as recently as last month many hedge funds are still touting their positive performance with barely mentioning their portfolio or business risk controls - over the long-term you must pay attention to more than a goal to return 16+% a year. I'm not saying Atticus is one of these firms, with their size they surely have many controls in place. In general though, I believe the industry needs a shakeout every 7-9 years.

The following piece on Atticus Capital is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund related announcements please see our Hedge Fund Tracker Tool.

Story #1: Atticus Closes Two Funds, Barakett Bids Farewell

Atticus Capital has shut down is reducing its operations by closing two of its funds. After receiving less than 5% of redemptions from investors, Timothy Barakett, the founder of Atticus Global, decided to shut down Atticus Global, Ltd. and Atticus Global, LP. Barakett founded Atticus with $6 million and expanding to roughly $20 billion in assets under management in 2007. He is returning $3 billion back to his investors, in a letter to his investors he explained his decision:

I have used the market’s recent strength to begin liquidating a significant amount of our holdings. We currently expect that the portfolio will be fully liquidated by September 30th and that we will be in a position to return approximately 95% of your capital in early October. The balance of investor capital will be returned after the final audit is completed, which should be later this year....

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Story #2:

Atticus Capital, the hedge fund manager co-chaired by Nathaniel Rothschild, will be reduced to bare bones after announcing plans to return $4 billion to investors.

Timothy Barakett, the 44-year-old Canadian who founded Atticus with $6 million in start-up cash in 1995, wrote to investors today to tell them that he would close two of his funds – Atticus Global, worth $3.4 billion, and $600 million Atticus Trading.

Just one fund, Atticus European, worth $1.1 billion and managed by Mr Barakett’s partner David Slager, will continue to operate.

Atticus’s downsizing is another sign that the era high-profile, aggressive hedge funds, that publicly berated companies’ management and flaunted their connections to the rich and famous, has ended.

At its height in 2007, Atticus was worth $20 billion but in the year to the end of July returned a negative 13.3 per cent, under-performing the widely-recognised Credit Suisse Tremont Hedge Fund Index, which showed a –9.3 per cent return over the same period.

Mr Barakett is best known in the UK for attempting to scupper Barclays’ $64 billion offer for ABN Amro, for which he argued Barclays’ was offering too much. Read more...


Story #3:

Atticus Capital, one of New York’s most powerful hedge funds, has lost more than $5bn (€3.4bn) this year, as its record as one of the world’s top performing money managers was damaged by the credit crunch.

The firm’s two flagship funds fell by a quarter and almost a third by the end of August, marking among the biggest losses in dollar terms ever recorded by a hedge fund. This was as a result of its strategy of taking large, concentrated bets and using few “short” positions betting on a fall in prices to lower risk. Atticus had $14bn under management at the end of July, according to letters to investors, down from a peak of more than $20bn last year.

The losses reflect widespread difficulties for Event Driven Hedge Funds, which aim to buy cheap stocks in the expectation of a catalyst that will boost their value. Atticus, co-chaired by Nathaniel Rothschild, son of Lord Jacob Rothschild, has been closely involved in several of the highest-profile deals of recent years, helping scuttle Deutsche Börse’s bid for the London Stock Exchange and Barclays’ bid for ABN Amro, among other activism.

The Event Driven Hedge Funds Sector – which includes activist investors – was among the most popular with hedge fund investors last year but has seen a race for the exit as investors switch to strategies seen as more likely to prosper during a bear market. Read more...

Story #4:

According to a media report, Atticus Capital, one of New York's most powerful activist hedge fund the largest investor in Deutsche Börse, has put its entire stake in the German exchange into a special limited vehicle to block redemptions by clients and boost its negotiating strength with management.

According to the report published by the FT.com, the stake of just over 11 per cent held through shares and derivatives, made up almost a fifth of Atticus's funds under management at the start of the year but has since halved in value.

According to the report, the losses have caused concern among some Atticus clients, who have expressed concern about such a liquid stock being put into a "side pocket." The report says that Atticus argues that it wants to be able to represent themselves as solid investors in the German exchange, but the decision has not gone down to well with some of the hedge fund's clients. Read more...


Story Update #4:

NEW YORK (Reuters) - Hedge fund company Atticus Capital denied market rumors it was liquidating its positions and closing down and said it had a large net capital position and was looking for investment opportunities, the Wall Street Journal reported on Thursday.

Atticus's two main hedge funds have been hit with losses of between 25 percent and 32 percent this year through August, but investors are largely sticking with it, according to unnamed investors cited by the Journal. Read more...

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Tags: Atticus Capital, Nathaniel Rothschild, Jacob Rothschild, Deutsche Börse, London Stock Exchange , Barclays, ABN Amro, hedge fund asset losses 2008 2009, low hedge fund performance, record asset losses in hedge fund industry

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