Money manager Jerry Paul will put down his lance and close Quixote Capital Management, the latest in a string of Denver hedge funds to cease tilting at windmills.
Quixote Capital offered a mutual fund and hedge fund that sought to profit from the price differences and volatility in the stocks of companies buying and being bought out.
Last summer’s credit crunch, however, reduced the capital available and the appetite for buyouts, leaving fewer opportunities in merger arbitrage.
“There is not that much to do here,” Paul said.
The mutual fund closed at the end of January, and the hedge fund will liquidate this month.
Returns were in the single digits, and after six years the firm at most managed $30 million in assets, Paul said.
Paul is hoping to join another investment firm where he can manage high- yield and other fixed-income securities, something he won national recognition for while at the Invesco Funds Group in the 1990s.
“The real opportunity now is in credit-related assets,” Paul said.
After the stock market collapsed in 2000 and 2001, several local mutual-fund managers left to start hedge funds.
For the past few years, the trend has gone the other way, with hedge-fund managers such as Jerry Peterson, John Schroer and David Prokupek closing shop.
One of the largest Denver hedge funds to close was the $300 million Galena Street Fund, which shut down last summer after its investments in subprime- mortgage bonds went south.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
