Carlson Capital's latest investor letter reveals market-lagging flagship funds, and insiders say two more portfolio managers have jumped ship
- Carlson Capital's two multi-strategy funds - Black Diamond and Double Black Diamond - have returned just 2.5% and 1.4% this year through the end of October, an investor document shows.
- The firm has also lost two portfolio managers recently, including real-estate investor Matt Adams and healthcare PM Rob Gupta, who joined Millennium.
- Its hedge fund assets overall stand at roughly $4.8 billion - roughly 40% less than the $8.2 billion the firm began 2018 with.
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Carlson's tough 2019 continues.
To start, the firm has seen a string of investment talent departures. It's the latest in what has been a volatile few years for Clint Carlson's 26-year-old hedge fund, which has included a roughly 40% drop in assets since 2018 to $4.8 billion as of the end of October.
Real-estate portfolio manager Matt Adams, healthcare portfolio manager Rob Gupta, managing director Narvir Sidhu, and mortgages trader Gary Helene have all left the firm in the last couple of months, sources tell Business Insider.
Gupta has joined Millennium's Arch Rock Management, while Sidhu is now a portfolio manager for Segantii Capital Management in London, according to their LinkedIn profiles. The departed employees either did not respond to requests for comment, could not be reached, or declined to comment.
And the Dallas-based hedge fund manager's two flagship multi-strategy funds - Black Diamond and Double Black Diamond - finished October up 2.5% and 1.4%, respectively, for the year so far, according to an investor letter. Meanwhile, the average hedge fund has returned more than 7% and the stock market is up double-digits.
Carlson declined to comment.
A source close to the firm said that Carlson Capital has around 150 people total at the moment, and recently hired Adam Bernstein and Greg Thomas as portfolio managers.
Bernstein had spent 10 years at Glenn Dubin's Highbridge before starting his own fund, Pagoda Asset Manager, in 2014; he rejoined Highbridge in 2018. Thomas ran the Blackstone-backed Carbonado Capital before joining Carlson.
The firm's assets have tumbled over the last three years, as the fund was plagued by poor performance in 2017 and key personnel departures in 2018 and 2019. After starting August of 2017 with $9.1 billion in AUM, Carlson Capital lost nearly $1 billion in assets in the last five months of that year.
The firm's performance did bounce back in 2018, a year where the average hedge fund lost money thanks to a fourth-quarter whipsaw in markets. Both flagship funds were up, returning roughly 2.5% each, but the firm also saw departures of its head of fixed income, chief risk officer, and treasurer during 2018.
This year, Carlson Capital saw investors redeem from its stock-picking Black Diamond Thematic fund after one of the fund's portfolio managers, Matthew Barkoff, left the firm in January. The fund's assets have dropped more than 90% from its peak of more than $1 billion in 2017, an investor document shows, with current assets at $71 million.
The firm's hedge fund assets overall stand at roughly $4.8 billion - about 40% less than the $8.2 billion the firm began 2018 with.
While the firm's flagship funds have lagged competitors like Citadel, Balyasny, Millennium, Point72, and others this year, its single-strategy funds, including the aforementioned Black Diamond Thematic, have outperformed the firm's mainstays.
The event-driven option, known as Black Diamond Arbitrage, has made 4.59% so far this year. Black Diamond Relative Value is up 8%, and Black Diamond Thematic has been the best out of all the funds, with a 10.24% return.