Arrowhawk Capital Partners, an institutional multistrategy hedge fund manager, will close by the end of the first quarter, Michael C. Litt, founding member and chief investment officer, said in an interview.
Four of Arrowhawk's investment strategies, totaling about $200 million of the firm's aggregate $575 million in assets under management, will close and money will be returned to investors by March 31, Mr. Litt said.
The other two strategies will be spun out by their portfolio managers into new companies.
Jennifer Fan, senior portfolio manager, will take the $284 million relative value commodities strategy and 10 Arrowhawk employees with her to form Arbalet Capital by April 1.
Najib S. Canaan, who co-managed Arrowhawk's $42 million Structured Credit Opportunities Fund through his separate company, Marinus Capital Management, will take those assets with him and add them to the more than $100 million he manages separately, Mr. Litt said.
Mr. Canaan, a Marinus principal, will take five Arrowhawk employees with him when the fund's assets are transferred to his firm.
Arrowhawk is closing because the firm was unable to raise significant assets since it was founded in October 2008. Mr. Litt attributed the slow growth to the fact that many new institutional hedge fund investors are busy building up their core hedge fund investments by “funding the megamanagers who specialize in large-cap strategies,” Mr. Litt said.
“Our closure speaks more to the business environment for small hedge funds and managers of small and midcap assets than it does to our strategy and investment approach,” Mr. Litt said.
Mr. Litt noted the irony of Arrowhawk's impending closure, given that the firm's flagship multistrategy Durable Alpha Fund returned between 1% and 2% in 2011 when most other hedge funds were down in the year.
Mr. Litt has not considered his future plans and said he is entirely focused on making sure that the “handful” of Arrowhawk employees that are not leaving with Mr. Canaan and Ms. Fan are “meaningfully employed” by March 31.
“Making sure that these two young companies launch successfully and thrive and that all of our employees have jobs is my job now,” Mr. Litt said.
