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SkyBridge cuts investments in top hedge funds in first quarter

Published 06/14/2016, 03:40 PM
Updated 06/14/2016, 03:50 PM
SkyBridge cuts investments in top hedge funds in first quarter

By Svea Herbst-Bayliss

NEW YORK (Reuters) - SkyBridge Capital, a big investor in hedge funds, cut its stakes in portfolios managed by Daniel Loeb and John Paulson and exited funds of other prominent investors in the first quarter, a U.S. regulatory filing showed.

The pullback was the largest at Loeb's $16.5 billion hedge fund Third Point, which a year ago had managed about 10 percent of the SkyBridge Multi-Adviser Hedge Fund's assets of roughly $7 billion, according to the filing with the U.S. Securities and Exchange Commission last week.

SkyBridge also exited investments in Barry Rosenstein's Jana Partners and Leon Cooperman's Omega Advisors during the first quarter, the filing showed.

Many hedge funds posted losses in early 2016 in an increasingly volatile stock market. Since late last year, SkyBridge managers have been cutting exposure to so-called event-driven strategies that bet on mergers and acquisitions, and other corporate changes.

Returns at the SkyBridge fund fell roughly 6 percent during the third quarter and about 10 percent in the nine months to March 31.

SkyBridge Capital was founded by Anthony Scaramucci and oversees a total of $12.5 billion in assets in the Multi-Adviser fund and other portfolios.

SkyBridge managers have reallocated money into funds that invest in cash-generating securities like mortgages, Ray Nolte, SkyBridge's chief investment officer said in a phone interview on Tuesday.

SkyBridge is bracing for more stock market swings, Nolte said. "We found that the risk-reward profile is more attractive in cash flow strategies than the higher beta strategies."

At the end of the first quarter, Loeb's Third Point Ultra Fund managed 1 percent of the SkyBridge fund's capital, down from 5.43 percent at the end of the fourth quarter, the filings showed. At the end of the first quarter 2015, Third Point Ultra managed 9.92 percent of the SkyBridge fund's assets.

The Paulson Enhanced fund managed 3.87 percent of SkyBridge fund's capital at the end of the first quarter, down from 5.18 percent at the end of 2015. At the end of the first quarter 2015, it managed 9.71 percent. Paulson & Co oversees $13 billion in assets.

Rosenstein's Jana Nirvana fund was dropped during the first quarter after managing 0.73 percent of the SkyBridge fund's assets at the end of 2015. At the end of last year's first quarter, The SkyBridge fund had 3.05 percent of its capital in the Nirvana fund and 2.05 percent in the Nirvana Offshore fund, filings showed. The Nirvana fund has lost 7 percent since January 2016.

Representatives for the funds declined to comment.

SkyBridge has redeployed some of the money and invested 1.9 percent in the Providence MBS Fund Ltd and 1.34 percent in the Providence MBS Fund LP, the filing shows.

It also increased its allocation to specialist credit manager Waterfall Asset Management and structured credit firm 400 Capital Management.

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