Philippe Jabre is returning money to investors after an "especially challenging" year, adding to the swelling list of hedge fund veterans giving up on an industry where money-making opportunities have dwindled.
Geneva-based Jabre Capital Partners is returning client money in the three funds personally managed by Mr. Jabre, said Mark Cecil, one of the firm's founding partners. The remaining two funds, one focused on emerging markets and the other on European credit, will keep operating with outside money, he said.
This year has been exceptionally tough for hedge funds as asset prices tanked and volatility — usually a friend for money managers seeking benchmark-beating returns — returned after a period of calm. Wide price swings, a waning bull market and rising interest rates were seen as the elixir the $3.2 trillion industry needed to overcome years of subpar performance. Instead, many firms got pummeled in last month's market swoon and are headed for their worst year since 2011.
Mr. Jabre, the founder and chief investment officer of his namesake firm, is selling positions in a "disciplined manner" and intends to return most of the proceeds by February, he wrote in an investor newsletter dated Wednesday and obtained by Bloomberg News. Jabre Capital managed about $1.2 billion of assets as of April with more than 40 employees. Cecil declined to comment on the firm's current size.
"In previous periods weakness created opportunities, but as we survey the outlook for 2019, we are concerned that we don't see those opportunities," Mr. Jabre wrote in the letter. "Both the political and economic outlooks remain confused and without clear direction."
Some of the biggest names have been caught up in the melee.
Jon Jacobson's $12.1 billion Highfields Capital Management is returning client money after two decades, joining other well-known operators including Richard Perry's namesake company, Eric Mindich's Eton Park Capital Management and John Griffin's Blue Ridge Capital, which have all exited the industry over the past two years. Leon Cooperman, meanwhile, plans to convert his firm into a family office at the end of the year.
An estimated 174 hedge funds were liquidated in the third quarter globally, outstripping new starts by 30, data from Hedge Fund Research Inc. show.
It's not the first time the industry has been tripped up by volatility. In 2011, as Europe's sovereign debt crisis roiled global markets, funds industrywide lost an average 5.3%, according to data compiled by Hedge Fund Research Inc. A slew of managers were forced to close their businesses.
Philippe Jabre, a Lebanese Christian educated at French schools in Beirut, got his start at BAII in the 1980s, managing oil money for Middle Eastern countries. He later moved to GLG Partners, formed as a hedge fund unit within Lehman Brothers Holdings in 1995 by ex-Goldman Sachs Group bankers Noam Gottesman, Pierre LaGrange and Jonathan Green — the G, L and G in GLG Partners.
