By Svea Herbst-Bayliss
BOSTON (Reuters) - Steve Kuhn, one of the hedge fund industry's most widely known fixed income traders, is leaving Pine River Capital Management only months after the fund he co-managed for eight years posted its first-ever loss.
Pine River Capital Management wrote to clients on Tuesday that Kuhn would soon be "completing his exit from the firm." Kuhn told Bloomberg Television's Stephanie Ruhle that he is leaving to focus more on philanthropy.
"I am searching for the narrow gate, trying to take a new path in life," Kuhn told Ruhle, crediting two pastors plus friends and family for helping him reach this decision.
Kuhn was one of four managers who helped the Pine River Fixed Income Fund score some of the industry's biggest gains. They included a 93 percent return in 2009, fueled largely by bets on the housing market.
Jiayi Chen, Colin Teichholtz, and Brendan McAllister, the other managers, are staying at the fund, Pine River's investor relations team wrote to clients in a letter seen by Reuters.
The fund was established in 2008 with a 21 percent gain and quickly helped bolster the now $14 billion firm's reputation and assets only a few years after Brian Taylor founded it with $5 million in startup capital at his lakeside cabin in the town of Pine River, Minnesota.
A 31 percent gain in 2010 followed by strong numbers every year until 2015, turned Kuhn, a Minnesota native with a degree from Harvard, into a popular speaker on the hedge fund industry conference circuit, often explaining complex trading strategies in simple language.
Last year was a rare misstep for the fund when investments in corporate junk bonds left it with a loss of 2.7 percent. Losses continued in early 2016 when it was off 4.6 percent through February. Assets have dwindled to roughly $2 billion from their peak of $4 billion.
The Pine River Ultra Master Fund, which Kuhn managed alone, was closed this year after having lost money every year since it was launched in 2014. It never gained much traction, overseeing only $185 million in assets and losing 11 percent in the first two months of 2016.
Kuhn said he plans to transfer his economic interest in the fixed income fund to the Pine River Foundation and that every dollar he makes will go to charity. Kuhn will help "shape the firm’s policy on philanthropy for the years to come," the letter said.
(with additional reporting by Lawrence Delevingne; Editing by Alan Crosby)