Eton Park to Shut Down as $3 Trillion Hedge Fund Industry Faces Turmoil
By MATTHEW GOLDSTEIN
Eric Mindich is the latest big-name hedge fund manager to throw in the towel — another sign of turmoil in the $3 trillion hedge fund industry.
Mr. Mindich, a 49-year-old former Goldman Sachs executive, sent a letter to investors on Thursday saying he was closing down his Eton Park Capital Management hedge fund, which manages about $7 billion.
The hedge fund, based in Manhattan, will begin the process of returning capital to investors and anticipates returning about 40 percent of its outside money by the end of April, according to a copy of the letter that was reviewed by The New York Times.
The decision by Mr. Mindich to close the firm, which was founded in 2004, comes after a tough year in 2016, when Eton Park’s returns were down about 10 percent. This year the hedge fund’s performance has so far been flat.
The firm sent out the letter after notifying employees earlier Thursday of the decision to close.
Eton Park is the first big hedge fund to close this year. Last year, there were a number of notable hedge fund closings, including Perry Capital, which Richard C. Perry shut after years of poor performance.
Over all, 2016 was one of the worst years for hedge fund closures since the financial crisis, with hundreds of smaller funds shutting down because of poor performance, investor redemptions and increasing complaints about high fees.
In his letter, Mr. Mindich attributed the decision to close to “a combination of industry headwinds, a difficult market environment and, importantly, our own disappointing 2016 results.”
He added, “As responsible stewards of your capital, we have been unwilling to compromise on the business model and investment program in which you invested or the way in which we have pursued it.”
Mr. Mindich first made his name as a fast-rising star on Wall Street, heading up Goldman’s arbitrage desk at the age of 25. In 1994, at just 27, he became Goldman’s youngest partner ever and was a leader of the firm’s equities arbitrage business.
One of the hedge fund’s best years came in 2013 when it returned 22 percent. In 2008, one of the worst years for hedge funds, Eton Park lost 10 percent, but that was far better than most other firms fared.
Eton Park had offices in London and Hong Kong as well. But a week ago, the firm quietly closed its London office, a sign of the trouble to come.