Woodbine – Hedge Fund Biggest Percentage Decline

Since the crash of 2008, so-called macro funds like Woodbine, which make big bets based on shifting geopolitical realities, have been one of the most popular strategies among new fund launches.
Investors hoped they would benefit from the tectonic changes in the world order, but so far these funds have failed to deliver.

Hedge fund launched with much fanfare by former Soros Fund Management brass Josh Berkowitz and Marcel Kasumovich in 2008.
While capital was scarce in the post-financial crisis world, Woodbine’s dynamic duo were so hot that they turned away money after raising $2.5 billion in just a few months. Bet they’d love a little of that cash right about now. Two of the founding partners left earlier this year and the once-hot hedgies are now down to about $500 million.
Woodbine managed as much as $3.2 billion at its height in July of 2010 but had already fallen to $1.2 billion by this past January — the biggest percentage decline in AR’s Billion Dollar Club, which includes funds with more than $1 billion.
“They raised a lot of money on the promise of delivering some really great numbers,” said a hedge fund executive close to the situation.
The 46-year-old Berkowitz lured investors with reports of his 34 percent annual returns at Soros for three years prior to launching Woodbine.
The departure in March of co-founder Kasumovich — who had joined Soros in 2004 from Merrill and served as director of research at Woodbine — led some investors to leave, according to individuals close to the firm.
A month earlier, Richard Cordsen, a co-founding partner who ran investor relations, left. He returned to Permal, the fund-of-funds giant that was one of Woodbine’s big institutional investors as of March 31.
Since the crash of 2008, so-called macro funds like Woodbine, which make big bets based on shifting geopolitical realities, have been one of the most popular strategies among new fund launches.
Investors hoped they would benefit from the tectonic changes in the world order, but so far these funds have failed to deliver.
One recent casualty — Zoe Cruz’s $200 million Voras Capital Management — was liquidated after losing 8 percent last year. Cruz is the former co-president of Morgan Stanley, ousted in 2007.
Woodbine did even worse than Voras last year, losing 12 percent. The firm was “early to call for a resumption in global growth,” says an individual close to the company.
“That was a mistake,” the source said.
The losses led to the changes in personnel, the person said.
Not that it’s been all bad for Woodbine. It had gained 13 percent in 2009, which boosted its reputation — even though the gain paled in comparison to the S&P 500’s 26 percent gain that year.
Woodbine’s gain shriveled to about 3 percent in 2010.
Volatile markets have whipsawed many hedge funds. In letters to investors obtained by The Post, Woodbine acknowledged that its losses were primarily due to wrong bets on currencies and commodities.
Last December, for example, it said it lost money betting on the euro against the Swiss franc, while in February gold holdings caused most of the losses. In April, shorting the Japanese yen did the damage. Woodbine’s returns finally turned positive in May, and Berkowitz hopes it’s a positive sign. The firm expects to raise new investor money by July 1, according to a spokesman.

Read More: NYPost

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