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Hedge Funds

Highfields shutting down $12.1 billion hedge fund

Highfields Capital Management is winding down, according to a letter to investors.

Jonathon Jacobson, founder, CEO and chief investment officer of the $12.1 billion equity hedge fund, is closing the firm because "after three and a half decades of sitting in front of a screen, I realized I am ready for a change," according to a letter sent Wednesday obtained by Pensions & Investments.

"Recently I began to give serious consideration to the idea of winding down the portfolio and turning Highfields into a family office," Mr. Jacobson wrote. "I recently concluded this path is the best way forward."

Mr. Jacobson wrote that the results this year and "those of the last few years have clearly not met either my expectations or yours," adding that the Highfields Capital Fund lost slightly more than 1% last month, "and the funds are down slightly more than that for the year." Officials at the firm would not comment beyond the letter.

According to P&I data, the fund's assets declined 6.2% in the 12 months ended June 30, rose 5.7% in the previous 12 months, and fell 1.6% in the year ended June 30, 2016.

Highfields clients will receive half their investments back by the end of 2018, with most of the remainder to be distributed by summer 2019, Mr. Jacobson wrote. There may be a side-pocket liquidating trust of up to 10% with illiquid securities or special situations. "There is tremendous value in our remaining portfolio," he wrote, "and as such, a rapid wholesale liquidation would be imprudent."

The firm will no longer charge management fees after Dec. 31.

Among investors in the Highfields fund is the $1.2 billion University of Kentucky endowment, which invested $13 million in mid-2017.