Sculptor Hedge Fund Rebounds With First Inflows Since 2014

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Sculptor Capital Management’s flagship hedge fund is finally beginning to turn around.

The firm’s multistrategy vehicle scored its first quarter of net inflows since 2014, marking the end of years of client withdrawals that totaled about $30 billion. The fund and its associated portfolios attracted a net $78 million of fresh cash, bringing total assets in those products to $10.9 billion as of March 31, the firm said in a statement Wednesday.

The results, achieved in the last months of Chief Executive Officer Robert Shafir’s tenure, are a vindication of his promise and efforts to reverse the asset bleed. Last month, Chief Investment Officer Jimmy Levin succeeded him.

Addressing the hedge fund inflows on Sculptor’s earnings call Thursday, Levin said that the new cash came from a broad range of investors. “It’s from all types of allocators all around the world: consultant-advised, non-consultant advised, institutional, non-institutional,” he said. “It’s been a bit of everything, which is why we described it as feeling healthy.”

Sculptor, founded in 1994 by billionaire Daniel Och and formerly known as Och-Ziff, had seen withdrawals since disclosing in 2014 that the firm was the target of a bribery probe into its business in Africa. In addition to shaking up its management ranks, the company took on the new name in 2019 to distance itself from the crisis, which had led to a client exodus and a plunge in its stock price. In a bid to lure back clients, the firm also shrank or shuttered its non-core businesses and focused on improving the performance of the flagship.

Sculptor Hedge Fund Rebounds With First Inflows Since 2014

Sculptor’s Africa unit reached a $138 million settlement on the bribery matter late last year. That came in addition to the firm previously paying hundreds of millions of dollars in fines and penalties as part of a deferred prosecution agreement with the U.S., and a guilty plea by the Africa unit. Following the 2020 settlement, Shafir said that the firm had put all legacy issues “to rest.”

Sculptor named Shafir, a former executive at Credit Suisse Group AG, as CEO in 2018 and he was seen as a steady hand to lead the firm amid a slew of top personnel departures. The move to eventually promote Levin to the top job rewarded a Sculptor veteran with strong ties to Och and who was once passed over for the post. Meanwhile, Och has stepped back entirely, retiring from his chairman role in 2019 and withdrawing his money from the hedge fund.

The firm’s assets under management stood at an estimated $36.8 billion as of May 1, including $15 billion in collateralized loan obligations, which have grown to become the company’s biggest business. With $11.2 billion in multistrategy funds -- Sculptor’s highest-fee product -- hedge fund assets made up a third of the firm’s total as of May 1.

Sculptor’s CLO-focused Institutional Credit Strategies attracted the most cash in the first quarter, totaling $304 million and helping bring the firm’s total net inflows to $404 million. Meanwhile, Sculptor’s Opportunistic Credit Funds, saw $117 million in withdrawals. Assets under management totaled $37.4 billion as of the end of the quarter.

Sculptor’s Master Fund gained 6.3% in the first four months of the year.

In addition, Sculptor reported adjusted distributable earnings of 62 cents a share in the first quarter, beating analysts’ estimates.

©2021 Bloomberg L.P.

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