This $800 Million Hedge Fund Will Sell 100% Of These Positions

Yet another hedge fund has become a victim of global market volatility, low oil prices, rising dollar and unfriendly market conditions. Wingspan Investment Management, which was founded in 2013 by former Goldman Sachs Group Inc. head of loan trading and distressed investing Buckley T. Ratchford, said it was shutting down and returning back investors their money due to poor market conditions and losses, according to Bloomberg. The New York-based hedge fund was started with the seed money provided by legendary investor Julian Robertson. According to the source, Buckley T. Ratchfordtold said in a letter to the fund’s clients that they will be returned 80% of their money by January 31, and the rest will be returned by the end of the second quarter of 2017.  Ratchfordtold added that the recent market conditions proved to be difficult for Wingspan Investment Management’s investment strategy which focused on long/short, middle-market focused credit investments. However, the investor admitted that such difficulties are part of businesses in this sector, and the fund should have “navigated” the situation in a better way. Ratchfordtold also said that the Master Fund’s performance didn’t meet his standards of expectation. The letter also announced the suspension of investors’ right to redeem their money.

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Wingspan Investment Management was seeded with $250 million by Reservoir Capital Group. Its strategy was based on an increased focus on leveraged corporate capital structures and targets opportunities across performing, stressed, and distressed credit and special situation equities.  The source added that the hedge fund lost about 15% in 2015. The fund used to manage over $1 billion as of the end of last year, but these assets plummeted to $800 million to date. Buckley Ratchford told his clients back in December last year that he had spotted one of the most “exciting investment opportunity sets” of his career, despite of the fund’s six consecutive months of losses.

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Hedge Fund Closures  

2016 has been a disastrous year for the hedge fund industry in general. According to Hedge Fund Research data, 530 hedge funds were closed in the first half of the year, while 406 new funds sprouted up in the same period. Investors pulled over $70 billion from the $3 trillion hedge fund industry since the start of the year through October amid high fees, plunging returns and insider trading scandals. Big names have been washed out from the industry. Perry Capital said in September that it would close its operations after 28 years. Earlier this month, Emerging Sovereign Group, another fund founded in 2002 and backed by Julian Robertson, said it was shutting down due to heavy redemptions from investors and tough conditions. Similarly, Orlando Muyshondt’s Tyrian Investments is also closing its shutters amid money exodus.

Let’s have a look at some of the important holdings of Wingspan Investment Management that will be sold by the fund amid its closure.

Wingspan Investment increased its position in Scientific Games Corp (NASDAQ:SGMS) by 350% in the third quarter holding 615,710 shares worth $6.94 million. Scientific Games Corp’s stock is up over 72% year-to-date. The Vegas-based gambling products company reported a loss of $1.13 per share for the third quarter, worse than the estimates of $0.84, while revenue of $720 million, was higher than the expected $709.4 million. A total of 24 funds from our database held shares of Scientific Games Corp (NASDAQ:SGMS) at the end of September, compared to 21 funds a quarter earlier.

Wingspan Investment acquired 792,700 shares of HC2 Holdings Inc (NYSEMKT:HCHC) during the third quarter, ending the period with a total of 2.25 million shares of the company. The total value of these shares was $12.29 million. Shares of the New York-based telecommuncations company have lost over 27% since the beginning of the year. The company reported a loss of $0.20 per share for the third quarter, $0.04 worse than expected, while revenue of $413.1 million was higher than the consensus estimate of $388.5 million. During the third quarter, the number of funds tracked by Insider Monkey long HC2 Holdings Inc (NYSEMKT:HCHC) went up by three to 10. These funds held roughly 16.50% of the company’s stock at the end of September.

On the next page, we will discuss some of the other important Wingspan Investment Management’s holdings.

There were over 2.01 million shares of Constellium NV (NYSE:CSTM) worth $14.51 million in Wingspan Investment Management’s equity portfolio at the end of September, as the fund upped its stake in the company by 34% in the period. The Netherlands-based aluminum products company recently has announced its third-quarter results EUR0.14 ($0.15) per share in the period, in-line with the analyst estimates, while revenue in the quarter was EUR1.2 billion, versus the consensus estimate of EUR1.37 billion. Last month, Seaport Global Securities upgraded Constellium (NYSE: CSTM) to ‘Buy’ from ‘Neutral’ and reaffirmed its price target of $8 per share. The stock is down by over 18% year-to-date. At the end of September, 32 funds tracked by us held shares of Constellium NV (NYSE:CSTM) worth $283.82 million in aggregate, which represented around 36.20% of the outstanding stock.

Wingspan Investment Management upped its stake in TerraForm Power Inc (NASDAQ:TERP) by a whopping 1.82 million shares during the third quarter. At the end of September, the fund held 2.068 million shares valued at $28.78 million. The yieldco which was spun-off from the now-bankrupt Sunedison has been recently offered $13 per share, or $1.8-billion, buyout deal by Brookfield Asset Management. However, recently SparkSpread reported citing an industry source that AES Corp (NYSE:AES) might also be interested in acquiring TerraForm Power. Between July and September, the number of investors from the Insider Monkey database holding shares of TerraForm Power Inc (NASDAQ:TERP) plunged by six to 20.

Wingspan Investment Management reported a $28.96 million position in Yahoo! Inc. (NASDAQ:YHOO), which contained 672,050 shares, down by 65% over the quarter. Bloomberg reported on Thursday that Verizon Communications Inc. (NYSE:VZ) is now considering a price cut and even suspension of its $4.83 billion deal with Yahoo after Yahoo shocked the world on Wednesday confirming a second major email hack which affected over 1 billion users. The source said that a legal team of Verizon is gauging the intensity and gravity of the reported email hack to explore the possible options. A total of 90 funds followed by us held long positions in Yahoo! Inc. (NASDAQ:YHOO) with a total of value of $8.27 billion at the end of September, versus 81 funds and $6.77 billion, respectively, a quarter earlier.

Disclosure: None