Pine River Capital Management is closing the Pine River Fixed Income Fund as part of the final phase of a yearlong restructuring for the alternative investment manager, which managed $12.9 billion as of June 1.
The move to liquidate the hedge fund and return $1.6 billion of assets to investors follows the decision by Steve Kuhn, partner, head of fixed income and a co-portfolio manager of the fund, to reduce his active role in Pine River to focus on philanthropy, wrote Brian C. Taylor, Pine River’s CEO and co-chief investment officer, in a client letter obtained by Pensions & Investments.
The Pine River Fixed Income Fund has had “great success since it was launched in 2008, not least due to its prescient and aggressive trading in residential mortgage-backed securities following the financial crisis,” Mr. Taylor said. Because the fund became more multistrategy in nature over time, Mr. Taylor said the decision was made to concentrate on managing one multistrategy fund — the firm’s flagship Pine River Fund.
The fixed-income fund’s performance year-to-date through May 31 was -2.65%, said a source who asked for anonymity.
“A key goal of our reorganization has been to rationalize our product offering and focus on core products,” Mr. Taylor said in the letter, noting that the fixed-income fund is the fourth to be wound down in the past year; the other funds were the Pine River Asia Fund, Pine River Credit Relative Value Fund and Pine River Ultra Fund.
Mr. Kuhn’s three co-portfolio managers on the Pine River Fixed Income Fund — partners Jiayi Chen, Colin H. Teichholtz and Brendan J. McAllister — are remaining with Pine River.
Mr. Chen has assumed the role of head of fixed income from Mr. Kuhn while retaining his previous role as head of agency MBS trading strategies; Mr. Teichholtz was named a co-portfolio manager of the Pine River Fund; and Mr. McAllister will concentrate on management of the Pine River Special Opportunities Fund, Mr. Taylor said.
The timing of the closure of the fixed-income fund could not be learned.
Pine River’s hedge fund lineup will further change next year when the $1.3 billion Pine River China Fund is rolled out into a new, separate firm under the leadership of Dan J. Li, partner, portfolio manager and co-head of Asian trading.
“The China Fund can best align the long-term interests of the management team and clients by spinning out from Pine River,” Mr. Taylor wrote in his letter, stressing that Pine River will retain equity ownership, service agreements and investment access to the China Fund.