(Bloomberg) -- Hudson Bay Capital Management is the latest hedge fund locking up investor capital for longer, according to people with knowledge of the matter.
Sander Gerber’s firm in April transitioned clients in its flagship fund to a 12.5% quarterly investor gate level, down from 25% — meaning it will now take two years to fully exit the fund instead of one.
The multistrategy firm said the shift would enhance stability and provide flexibility during times of market disclocation, one of the people said, asking not to be identified discussing confidential information. Investors who opted for a more prohibitive 6.25% gate obtained a management fee discount of 1.75%, compared to the regular 2%, the person said.
In 2021, Hudson Bay imposed a longer lockup period for its new investments, and now those terms also apply to everyone.
A representative for Hudson Bay — which managed $20 billion as of June 30 — declined to comment.
Hudson Bay joins other multibillion-dollar firms that have prolonged their lockup periods, though its two-year lockup is shorter than many of its competitors. Izzy Englander’s Millennium Management takes a minimum of five years to exit, while Balyasny Asset Management imposed a three-year lockup starting in April.
In a note reviewed by Bloomberg, Hudson Bay wrote that an “overwhelming majority” of investors supported the term change, and that the new policy would create competitive advantages that would help “deliver attractive returns for years to come.”
“This capital transition will reinforce our ability to withstand market downturns and play offense during periods when markets are most compelling,” Hudson Bay said in the note, pointing out that the firm had returns of 11% during the global financial crisis and 15% during Covid.
Hudson Bay first communicated the term change in the second half of 2023, according to a person familiar with the matter. The firm’s flagship fund returned 4.12% this year as of June 30, the person said.
--With assistance from Katherine Burton.
©2024 Bloomberg L.P.
