Snow Lake Shutters Asia Hedge Fund After Partners Leave Firm
Snow Lake Shutters Asia Hedge Fund After Partners Leave Firm
(Bloomberg) -- Snow Lake Capital will liquidate its Asia fund after the departures of two partners and steep losses earlier this year.
The asset manager will close the fund and stop investing in Japan and Korea while continuing to operate its China long-short and long-only funds, according to a person familiar with the matter.
Partners Paul Kim and Yusuke Saito, who ran the firm’s Asia Master Fund with founder Sean Ma, left the hedge fund on Nov. 1, according to a client email seen by Bloomberg. The decision to close the fund was reported earlier by the Financial Times.
The firm is among several hedge funds exposed to Greater China that incurred heavy losses recently as Beijing’s regulatory crackdown fueled volatility in the region’s stocks. Snow Lake’s Asia fund tumbled 31% in the first nine months of the year, including an estimated 11% in September.
Read more: Hedge Funds Snow Lake, TX Capital See Double-Digit China Losses
Snow Lake was hurt by its bullish bet on casino operator MGM China Holdings Ltd., people familiar with the matter have said. Macau gaming stocks were pummeled after the government announced a proposal to increase oversight. Shares of MGM China plunged 62% this year.
Trimmed Bet
Snow Lake, the gambling company’s largest public shareholder, amassed a stake that peaked at more than 8% early in the year, according to filings to the Hong Kong stock exchange. It has been paring that holding since late June at an average price of less than half what it paid in mid-February, bringing it below the mandatory disclosure level of 5%, filings show.
The firm’s China fund, which had tumbled by more than a third through September, has started to rebound. It climbed 16% in October and 7% so far in November. The fund is down 20% on the year, according to a person familiar with its performance.
The wind-down of the Asia fund will be completed by year-end, the person said. Any clients who choose to transfer their money into the China fund will retain their high-water mark, meaning they won’t pay fees until the losses they incurred in the Asia fund are recouped.
Ma set up Snow Lake in late 2009 with backing from Zhang Lei, the founder of Hillhouse Group. With offices in Hong Kong and Beijing, it managed about $2 billion in hedge and long-only funds as of August. It started the Asia fund in 2018 after the firm posted gains for eight straight years.
©2021 Bloomberg L.P.