Ex-Societe Generale Traders’ Hedge Fund to Shut Down

(Bloomberg) -- An ex-Societe Generale SA trader is shutting his less than four-year-old multistrategy hedge fund because of high running costs and difficult capital-raising environment.

Three Stones Capital Ltd. plans to return money to investors by the end of the year, Hong Kong-based Chief Investment Officer Jong Beum Kim said. The firm’s multistrategy hedge fund, which began trading in late 2015, oversaw $99 million as of July.

“Running a multistrategy fund with an adequate infrastructure, both in terms of human capital and technology support, requires a higher level of assets under management,” Kim said.

Almost 400 hedge funds liquidated in the first half, Hedge Fund Research Inc. data show. Fund closures have outpaced new starts in each of the past four years amid investor disappointment with returns and pressure on managers to cut fees while operational costs rise.

Kim, a former proprietary trading head and co-head of Asia-Pacific equities at Societe Generale, started the fund in December 2015, and was joined by Sebastien Cerbourg and Alexandre Avanian, fellow alumni of the French bank. Avanian left last year.

The Three Stones Asia Multistrategy Fund employed strategies including volatility trading and exploiting mispricing of related securities. It returned an annualized 5.9% between inception and the end of August, Kim said. That compares with the HFRI Relative Value Multistrategy Index’s 3.3% annualized gain over the same period. Fund assets peaked at $150 million, Kim said.

Investors pulled $4.7 billion from multistrategy hedge funds globally in the first half, according to eVestment data. They yanked $19 billion from the strategy last year, more than half of all hedge fund outflows in 2018.

Three Stones will continue to exist as a firm, Kim said, without elaborating.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editors responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net, Peter Vercoe

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