Longtime Hedge Fund Pennant Cap Management Closing

April 2, 2018 James Heinsman Hedge Fund News

Alan Fournier’s 17-year-old Pennant Capital Management, with a $1.5 billion AUM is closing shop. The fund has been struggling since the 2008 financial crisis.

“While I take great pride in our long-term returns, especially in light of our consistent low risk portfolio structure, our recent returns have been disappointing,” Fournier told investors. “I have been frustrated by our inability to match our historical results and deliver appropriate returns for our investors.”

David Tepper, Fournier’s mentor, backed the establishment of the firm in 2001 with $12 million seed money. The letter to investors announcing the fund’s closing stated that the fund earned 11.9 percent annually over the life of the fund, compared to 6.4 percent growth for the same time period for the S&P 500 Index. But since 2014 until now the fund has earned only 2.4 percent.

Pennant will be converted to a family office dedicated to managing Fournier’s own sizeable wealth.

The stock market has been a frustrating place for Fournier, 56, who is a long-short stock picker, a strategy increasing difficult to make work in the brave new world of quantitative and passive investing. Others have fallen before Pennant: John Griffin closed his $6 billion blue Ridge Capital just last year after more than 20 years of management. Passport Capital, launched in 2000, was also recently closed down by founder John Burbank, saying he was facing “unacceptable” losses.

Pennant had its best year in 2007, right before the financial crisis, when it earned a whopping 42 percent. The following year Pennant lost just a bit under 2 percent at the beginning of the crisis. The fund bounced back in 2009 with a 23 percent ascent. In 2014 AUM reached a high point of about $7 billion.

Alan Fournier, David Tepper, Pennant Capital Management,

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