6/27/2019 Backer of Well-Known Hedge Funds Shuts Down - WSJ
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HEDGE FUNDS Backer of Well-Known Hedge Funds Shuts Down Adamas Partners made investments in Baupost Group, Farallon, Lone Pine
Seth Klarman, chief executive of icer of The Baupost Group, speaks in New York in June 2018. Baupost was the recipient of Adamas’s biggest investment, of $100 million. PHOTO: JEENAH MOON BLOOMBERG NEWS
By Rachael Levy and Dawn Lim Updated June 26, 2019 12 06 pm ET
Adamas Partners LLC, a $1.7 billion investment firm that invested in hedge funds including Baupost Group LLC and Farallon Capital Management LLC, is shutting down.
The closure comes after Adamas’s funds lost money last year, a person familiar with the matter said.
Many firms in the hedge-fund industry have faced a reckoning in the last few years, with some funds shutting down and others lowering their historically high fees to keep investors from leaving. Driving the industry’s decline has been the simple fact that many hedge funds have lagged behind the broader market.
Known as funds of funds, the investment firms that promise access to hedge funds are also fighting to survive, as many investors have balked at paying them an extra layer of fees.
https://www.wsj.com/articles/backer-of-well-known-hedge-funds-shuts-down-11561564895?emailToken=c1f6699cf44cc55be3490512ed79c232aOmtj7… 1/2 6/27/2019 Backer of Well-Known Hedge Funds Shuts Down - WSJ Adamas is a small Boston-based fund of funds. But its roster has included Farallon Capital Management, the hedge fund founded by billionaire Tom Steyer, and Lone Pine Capital LLC, some of the people said.
Adamas’s largest bet—of more than $100 million—was in Baupost, which is run by billionaire investor Seth Klarman, people familiar with the investment said. Baupost’s returns have trailed the S&P 500 over the past several years, some of the people said.
Adamas was founded about two decades ago by former consultants at Cambridge Associates, a prominent adviser to endowments and pensions. The firm drew investors who wanted to tap its connections to some of the hottest hedge-fund names.
This year, Adamas decided to return investors’ money after one of its founders, Steven Berger, 65 years old, suffered health issues, according to a letter that Adamas sent clients this week. Adamas had been considering new investments as recently as this year, a person close to the firm said.
“This is a bittersweet decision for us,” Mr. Berger and the firm’s other partners, Rebecca Duseau and Heidi C. Pearlson, said in the letter.
Mr. Berger’s health issue isn’t life-threatening but was serious enough to prompt the firm to reassess whether to manage outside money, according to the letter.
Mr. Berger founded Adamas with Ms. Duseau and Ms. Pearlson in 2000 after working together at Cambridge.
The number of funds-of-funds has nearly halved since the financial crisis, from 2,462 such funds in 2007 to 1,321 as of the first quarter of this year, according to researcher HFR Inc.
Such funds have lost assets every year since 2007, from a peak of about $800 billion to roughly $640 billion as of the first quarter, according to HFR.
Write to Rachael Levy at [email protected] and Dawn Lim at [email protected]
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