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Ex-Goldman Duo’s Fund to Shut After Volatility Bets Go Awry
A hedge fund founded by former Goldman Sachs Group Inc. traders to wager on volatility in stock prices is winding down after the market turmoil of recent weeks.
Malachite Capital Management, a New York-based firm that oversees about $600 million, plans to dissolve its funds, the firm said in a statement Tuesday, citing extreme adverse market conditions of recent weeks. The firm, founded by ex-Goldman Sachs traders Jacob Weinig and Joe Aiken, had received margin calls from counterparties including BNP Paribas SA after its trades went awry, people familiar with the matter said. Alexandra Umpleby, a spokeswoman for BNP Paribas in London, declined to comment.
Malachite had wagered on volatility in stock markets, a bet that came undone as the spreading coronavirus caused shares to plunge worldwide, the people said. The illness, which has killed thousands and threatens a global economic recession, has triggered historic swings in asset prices that have tripped up some of the world’s largest investment firms. “Due to the extreme adverse market conditions of recent weeks and the resultant funds’ performance, the current and projected assets will not justify or support the current structure of the funds,” Weinig and Aiken said in an emailed statement. “It is in the best interests of the funds and their investors to dissolve the funds immediately pursuant to their governing documents in order to commence an orderly wind-down.” Weinig and Aiken left Goldman Sachs in 2013 to found Malachite. The fund has returned about 10% to investors on an annualized basis since its inception through January, according to an internal document obtained by Bloomberg, but it’s unclear how it performed in February and March.
Malachite’s prime brokers, which provide it financing and other services, are Goldman Sachs and Societe Generale SA, the document shows. Maeve Duvally, a spokeswoman for Goldman Sachs, and James Galvin, a spokesman for Societe Generale, declined to comment.
https://www.bloomberg.com//news/articles/2020-03-17/malachite-capital-to-wind-down-funds-amid-market-volatility