Earlier this morning, ValueWalk heard that Scout Capital would be closing its hedge fund, which we could not independently confirm. ValueWalk has now confirmed that the $7 billion firm, which had fantastic returns last year, is closing due to differing views among co-founders Adam Weiss and James Crichton.
Below is an excerpt obtained by ValueWalk which the firm sent to investors this morning:
January 29, 2014
Dear Partners and Shareholders:
This letter is a special one, coming as it does at the conclusion of our fifteenth calendar year serving you as our partners. After much soul searching, Adam has decided to step back from the management of outside capital. Because James intends to manage outside capital in the future, we have arrived at a crossroads for Scout. We have decided that the best way to handle this development is to return your capital to you promptly. We plan for you to receive 95% of your capital on or about April 1, 2014, and the remainder following the completion of the funds’ respective liquidation audits. The Scout brand and its businesses will be retired.
We carefully considered the option of maintaining Scout as a continuing enterprise, and establishing roles appropriate to our future levels of involvement.”
The letter stated further:
“Plan to Return Capital
The portfolio is highly liquid. Our cash position is over 80%, and the remainder of the portfolio is very liquid. The portfolio contains no side pocketed, private or credit investments.
We have attached a Notice of Compulsory Redemption/Withdrawal of Shares/Interests that covers the details of our plan to return your capital, and of course our team is available to assist you. If you should have any additional questions, please contact Kerry Kourepenos, President at 212-622-7856 or [email protected], or Eugenie Sibeud, Managing Director, Investor Relations at 212-896-2527 or [email protected] For general inquiries regarding your account, you may also email [email protected]”
Scout did not immediately return calls for comment.