Fortress Investment Group is planning to close its Fortress Marco fund managed by Michael Novogratz, according to Bloomberg based on information from a person familiar with the situation.
The report indicated that Fortress Investment Group will inform investors regarding the closure of its macro fund over the next few days.
The stock price of Fortress closed more than 3% to $5.44 per share today. The stock declined further by almost 7% to $5.07 per share during the extended trading, around 4:40 in the afternoon in New York.
Fortress macro fund fell 17%
The Fortress Marco fund suffered a 17% decline this year through September 25 after a management shakeup, according to an investor. Novogratz, a former U.S. Army helicopter pilot and Goldman Sachs executive became the sole manager of the macro hedge fund in July.
During an earnings call last month, Novogratz said he though the Federal Reserve would increase interest rates in September. He also believed that there were plenty of opportunities while China’s economy slowdown. He also stated that he was taking direct control of the macro fund, which declined 4.4% in August as the global financial market suffered a selloff due to China’s economic slowdown. In September, the macro fund fell 4.3%.
Fortress macro fund suffered losses from its bet on Swiss Franc
Fortress’ macro fund was negatively impacted by its bet on the Swiss Franc earlier this year. Many investment management firms including Fortress suffered huge losses after the Swiss National Bank decided to remove the three-year cap on its currency. The firm’s macro fund declined 7.6% for the week ended January 16. The firm also made some bad bets on Brazil and bitcoin.
The macro fund is one of the four pools that comprise the liquid markets business of Fortress. The unit was the only business that incurred losses during the second quarter, according to the company.
Fortress Marco to close part of hedge fund business
Last month, Fortress decided to shut down a portion of its hedge fund business. It was selling all of its investments in other hedge funds, which were made through its Partners funds.
Over the part few years, Fortress’ Partners funds reported weak performances. Its assets under management declined to around $400 million in the second quarter from its peak of $1.7 billion in 2010.
One potential investor who met with Mr. Novogratz years ago said he put his feet up on a table and salted his conversation with expletives, unusual behavior for a manager seeking to raise money.
Fortress is expected to close the fund before year end, according to one of the people. Mr. Novogratz is said to have been partly responsible for the decision, a reflection of his frustration at the firm’s inability to improve performance at the fund and anticipation of continued investor withdrawals, the people say.
On Monday, Fortress’s website continued to list Mr. Novogratz as a member of Fortress’s board of directors and chief investment officer of the macro fund.