New York-based hedge fund Eminence Capital is shutting down after 27 years, with founder Ricky Sandler informing clients that the firm will return approximately $5.9 billion to investors. The long/short equity fund, known for its bottom-up stock-picking approach, has halted redemptions to facilitate an orderly wind-down of its portfolio.
Sandler attributed the decision to disappointing performance, escalating operational costs, and intensifying competition within the hedge fund industry. In a letter to clients reviewed by Bloomberg, he acknowledged that the fund had "fallen short of our very high standard and your expectations." The firm expects to distribute at least 75% of net asset value by late June.
Eminence Capital, which managed three global equity strategies, employed 18 investment professionals in its New York office. The closure highlights the challenges facing stock-picking hedge funds amid volatile markets and rising expenses for talent retention and infrastructure. Sandler noted that evolving market structures have complicated the firm's fundamental research-driven approach.
The shutdown comes as other hedge funds also face turbulence. Man Group, the London-listed investment manager, reported stable assets under management of $228.7 billion but saw shares slip after a client withdrew $6.1 billion from one strategy in the first quarter. BlackRock's hedge fund unit recently advised clients to diversify strategies and monitor overlapping exposures, warning that crowded trades can complicate exits.
Sandler founded Eminence in 1999, serving as both CEO and chief investment officer. The firm specialized in fundamental long and short equity investments, focusing on individual company analysis rather than broad market bets. In his note, Sandler called the firm "a defining part of my life" and expressed pride in its culture and investor base.
The closure underscores broader industry trends: rising costs for trading desks, data capabilities, risk management, and operations have pressured smaller and mid-sized funds. As markets accelerate and scale becomes more critical, Eminence joins a growing list of hedge funds that have opted to return capital to investors rather than continue operating under challenging conditions.
Investors are now focused on the wind-down process, including the orderly liquidation of remaining positions and potential market impacts. The return of such a large sum may also influence where clients redeploy their capital, potentially flowing into larger, more diversified funds or alternative strategies.
