After a $1 billion launch, Diamondback founders Richard Schimel and Larry Sapanski lost money in their first quarter of trading for new fund Cinctive Capital
- Cinctive Capital, the new $1 billion fund from Diamondback founders Richard Schimel and Larry Sapanski, lost money in its first quarter of trading, sources tell Business Insider.
- The fund, which is still putting money to work and hiring its team, posted -2% net returns and -1% gross returns for the fourth quarter. The firm began trading at the end of September.
- Schimel was in charge of Citadel's now-shuttered Aptigon business for two years before founding Cinctive with Sapanski, who was the chief investment officer of family office Imua T Capital for the previous couple of years.
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One of 2019's hottest launches stumbled out of the gate.
Sources tell Business Insider that Cinctive Capital - the $1 billion launch by Diamondback founders Richard Schimel and Larry Sapanski - posted a net loss of roughly 2% in the fourth quarter after launching in late September. The firm's gross loss was roughly 1% for the quarter, sources said, but the firm is up to start 2020.
The manager, which is based in New York's Hudson Yards district, is still in the process of building out its team and putting money to work, a source familiar with the firm said, pushing expenses higher than normal for the quarter.
Schimel is one of several big-name Citadel alums to launch last year, joining Jack Woodruff, who founded Candlestick Capital, and Mike Rockefeller and Karl Kroeker, who started healthcare-and-technology-focused Woodline Partners. Schimel ran Citadel's now-closed Aptigon stock-picking unit for roughly two years, and previously founded Sterling Ridge Capital.
Sapanski was the chief investment officer of his family office, Imua T Capital, for the last couple years; before that, he founded Scoria Capital, which he ran from 2013 to 2017.
The pair are most well-known for Diamondback Capital, which they co-founded after working at Steve Cohen's SAC Capital together as portfolio managers. The firm was eventually undone by an insider trading probe that resulted in a Diamondback portfolio manager being found guilty in a trial. The conviction was eventually overturned, however, and an appeals court even forced the SEC to pay back Diamondback the $9 million the regulatory body fined the hedge fund.
Cinctive was backed by two large investors, the Employees Retirement System of Texas and Pacific Alternative Asset Management Prisma's hedge fund launch program. A press release about the firm when it launched noted that Cinctive had 11 portfolio managers when Schimel and Sapanski began trading. The management team includes Sapanski's brother, Richard; Point72's former head of research, Marc Greenberg; and Aptigon's former director of research, Alison Smith.