Hong Kong’s Tybourne to Shut $2.8 Billion Hedge Fund

(Bloomberg) -- Tybourne Capital Management is shutting its $2.8 billion hedge fund, retreating from bearish bets that have become increasingly difficult to make money from, said people with knowledge of the matter.

The Hong Kong-based firm will shift focus to its long-only and private investment funds, said the people, asking not to be identified because the information is private. It plans to return money in the Tybourne Equity Master Fund to investors over the coming months and waive performance fees on it in the interim, the people said.

Tybourne is following Lansdowne Partners in withdrawing from short-selling activities, one of the hallmarks of hedge funds. It told investors that growing passive money flows, market leverage and retail investor participation in markets have fueled volatility, hurting especially short wagers, the people said.

Former Lone Pine Capital LLC Asia head Eashwar Krishnan started the Tybourne hedge fund, its first, more than nine years ago. The fund lost about 10.5% in November, taking this year’s decline to more than 16%, said people with knowledge of its performance. It returned almost 53% last year, the people said. 

The “theoretical opportunity set” is still fertile on the short side, though Tybourne’s ability to capitalize on it has grown “progressively more difficult,” President Tanvir Ghani wrote in an email to investors that was seen by Bloomberg.  

A Tybourne representative declined to comment.

Tybourne is known for taking concentrated bullish bets on high-growth companies, such as Singapore-based online gaming and e-commerce provider Sea Ltd. The firm manages about $8 billion in total, including money in a fund that makes late-stage investments in private companies before they go public. 

London-based Lansdowne announced in July last year that it was closing its $2.8 billion main hedge fund after being hit by some of its worst-ever losses. It retained the ability to take bearish bets in some other funds.

Retail investors have been thwarting the practice of selling borrowed stocks to buy them back at lower prices. In January, Reddit traders began using Melvin Capital Management’s previously reported put options as a proxy for the New York-based firm’s short positions. Within weeks, they drove prices of heavily shorted stocks to astronomical levels, most famously GameStop Corp., which soared to an intraday peak of $483 on Jan. 28 from less than $20 at the start of the year. That forced Melvin to close out its short positions with a January fund loss of nearly 55%.

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