Sculptor Hedge Fund Hit Sixth Straight Year of Outflows in 2020

Sculptor Capital Management Inc. incurred withdrawals of $92 million from its flagship hedge funds in the fourth quarter, capping 2020 with its sixth straight year of outflows.

The withdrawals from the Sculptor Master Fund and associated portfolios brought the 2020 total to $464 million, according to a statement Thursday from the New York-based firm. Over the past six years, clients have pulled about $30 billion from those products.

Sculptor, formerly known as Och-Ziff, was founded in 1994 by billionaire Daniel Och. The outflows began after it was disclosed that it was the target of a bribery probe into its business in Africa in late 2014.

It re-branded with the Sculptor name in 2019 to distance itself from the legal troubles that caused a client exodus and a plunge in its stock.

Shares of the New York-based alternative asset manager advanced 12% to $20.61 at 9:51 a.m. in New York, paring their 12-month decline to 28%.

‘Legacy Issues’

Chief Executive Officer Robert Shafir said he expects the multi-strategy hedge funds will soon begin to reverse the client departures.

“Closing out the legacy issues opened up a lot of new conversations” with institutions and bank platforms, he said on a conference call, referring to a $138 million settlement reached by the firm’s Africa unit late last year. “I wouldn’t expect an avalanche of money to appear at our door tomorrow but it’s a question of when, not if.”

The Master Fund posted its best return in more than a decade, up 20%, Shafir said. Sculptor also raised a $2.6 billion real estate fund and strengthened its balance sheet to the strongest it has been since 2007, including repayment of debt. It now has just $145 million remaining.

In April, Jimmy Levin will succeed Shafir, who became CEO two years ago. Levin, an Och protege, was previously passed over for the job. Och left the firm in 2019.

Assets under management now stand at $36.4 billion, including $15.7 billion of collateralized loan obligations, which have grown to become the company’s biggest business.

With $10.5 billion in multi-strategy funds -- Sculptor’s highest-fee product -- hedge fund assets now comprise just over a quarter of the firm’s total.

Sculptor’s Master Fund lost 0.76% in January.

©2021 Bloomberg L.P.

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