Eric Mindich to Unwind $7 Billion Eton Park After 13 Years
Mindich to Unwind $7 Billion Eton Park Capital After 13 Years
(Bloomberg) -- Eric Mindich, a one-time Goldman Sachs star trader who jumped into the hedge fund industry during its heyday, is throwing in the towel on his $7 billion firm.
Mindich -- whose Eton Park Capital Management was among the biggest fund startups -- is returning client money after 13 years, he said in a one-page letter to clients Thursday. The firm expects to return 40 percent of all investors’ capital by the end of next month.
“Recently, a combination of industry headwinds, a difficult market environment and, importantly, our own disappointing 2016 results have challenged our ability to continue to maintain the scale and scope we believe necessary to pursue our investment program consistent with our founding principles,” Mindich, 49, wrote.
The decision follows the fall of another Goldman alumnus who ran a multibillion-dollar hedge fund. In September, Richard Perry called it quits, announcing that he was closing his main fund after almost three decades. Last year was the toughest for hedge fund closures since 2008. Liquidations totaled 1,057, according to Hedge Fund Research Inc.
Unlike some of the other firms, Mindich had net inflows in his main hedge fund last year. But it lost 9.4 percent in 2016, in part from a wrong way bet on Japanese equities, according to people familiar with the matter.
Global Player
Performance this year was flat, according to one of the people. Since Eton Park’s inception, it averaged annual returns of 9.4 percent and made money in the previous four years, including a 22 percent gain in 2013, one of the people said.
From the start, Mindich had set up his fund to be a global player, with offices in New York and London, and a team approach that focused on companies going through turnarounds, bankruptcies and other corporate events. It was an operation he wasn’t sure he could continue given that assets had fallen by 50 percent since 2011.
“As responsible stewards of your capital, we have been unwilling to compromise on the business model and investment program in which you invested or the way in which we have pursued it,” Mindich wrote. “As a result, we have made the very difficult decision to return your capital, from a position of relative strength.”
Mindich expects to return the rest of the money to clients in the coming months, though certain special investments will take longer, he said in the letter.
Mindich raised about $3.5 billion when he opened Eton Park in November 2004, the biggest startup in the industry at the time. It was a golden time for hedge funds when Wall Street traders were quitting big banks in droves to become their own bosses and hopefully make their fortune.
Before starting Eton Park in 2004, Mindich spent 15 years at Goldman, where he ran both the equities and equities arbitrage businesses and eventually served as senior strategy officer. He became the youngest partner in Goldman’s history at the age of 27, and was a member of the bank’s risk-arbitrage desk that came to spawn a group of big-name managers including Perry and Dan Och.
A spokesman for Eton Park declined to comment.
--With assistance from Saijel Kishan and Katia Porzecanski
To contact the reporter on this story: Katherine Burton in New York at kburton@bloomberg.net.
To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Alan Mirabella