Coatue’s Hedge Fund Investors Try to Redeem $250 Million, But Can’t Cash Out in Full
(Bloomberg) -- Coatue Management investors are pulling $250 million from the firm’s main hedge fund. But they won’t get all the money they’re asking for.
Assets invested in private companies will be withheld by Coatue and placed in a side-pocket, according to people familiar with the matter. That amounts to 13% of the cash being sought by clients -- a total of $33 million.
Coatue’s decision comes as the firm, like many industry peers, has increasingly invested in private companies, hoping to see outsized gains when these enterprises go public. About 11% of Coatue’s main hedge fund, which ran $15 billion as of year-end, is comprised of private firms. But as market volatility increases asset managers may be forced to mark down the value of their non-public stakes.
A spokesman for Philippe Laffont’s New York-based Coatue, which managed about $59 billion as of Dec. 31, declined to comment.
Side-pockets gained attention during the financial crisis when hedge fund clients sought to redeem hundreds of billions of dollars. To avoid selling assets at fire sale prices, funds pushed the holdings into stand-alone entities with the aim of selling the assets at higher prices in the future.
Investors are seeking redemptions as Coatue’s performance is flagging. Its main fund is down 11% this year through March 18, one of the people said, and 3% this month through that date.
Among Coatue’s top equity holdings as of Dec. 31 were Rivian Automotive Inc. and Moderna Inc., which have plunged 56% and 35% this year, respectively, through Friday.
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