Fortress Investment Group LLC plans to liquidate its macro business run by Michael Novogratz after two years of losses, according to a person with knowledge of the firm.
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The fund’s closing marks the end of a run for Novogratz, 50, a former wrestler and US army helicopter pilot, who started Fortress’s macro strategy in 2002 and helped build it into a business with $8.1 billion in assets at its 2007 peak.
This year follows on the heels of a disappointing 2014 when the macro fund lost 1.6 percent while its peers gained 5.7 percent, according to the Hedge Fund Research.
2014. Assets dropped to $2.3 billion by June of this year, with $1 billion in the fund and the remainder in client accounts. That compares with a 0.6 percent loss by hedge funds with a similar investing style, HFR data show. Wagers against USA government bonds and the Japanese yen cost the fund, among other moves. He previously spent 11 years at Goldman Sachs.
While the firm had notified investors about large outflows from its hedge funds in recent earnings calls, Mr. Novogratz’s expected departure would come as a surprise.
The Fortress fund is the latest in a series of macro hedge funds – which bet on interest rates, currencies, commodities, fixed income and stocks – to shut down lately. The company has a 52-week high of $8.65. Early this year, the fund suffered when Switzerland’s central bank surprised the market and scrapped the peg of the Swiss franc against the euro, a trade that was placed by Mr. Feig.
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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. 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. The shares have underperformed the S&P 500 by 2.81% during the past week but Fortress Investment Group LLC (NYSE:FIG) has outperformed the index in 4 weeks by 3%. The higher price target estimate is at $22 and the lower price target estimate is expected at $17 according to 5 Analyst.
