Carlson Capital Weighing a Shutdown of Black Diamond Thematic Fund

Carlson Capital L.P. is weighing whether to shut down what was once one of the Dallas-based company’s largest funds, with the fund’s two portfolio managers having already left the firm, according to people familiar with the situation.

The fund, known as the Black Diamond Thematic Fund, controlled about $1.4 billion at its peak in January 2017, according to one of the people. The Black Diamond Thematic Fund has been struggling with poor performance since at least 2018, the people said, and shrunk to $155 million in assets under management this year.

Carlson’s total assets under management have fallen from $8.1 billion to $7.3 billion so far this year, according to one of the people.

The potential closure of the fund highlights the continued struggle of hedge funds to hold on to client money as indexes and other low-cost investment vehicles outperform stock pickers who charge higher fees. Hedge funds underperformed the S&P 500 index in 2018 for the 10th year in a row.

A representative for Carlson said the firm hasn’t made a final decision on the fund.

Founded in 1993 by Clint Carlson, Carlson Capital runs four funds besides the Black Diamond Thematic Fund. A person familiar with the situation said that the other funds have had returns in the 2% to 5% range so far this year. The firm reported losses in 2017 and the Black Diamond Thematic Fund lost 22.1% after fees that year, according to Business Insider.

Matthew Barkoff, one of the Black Diamond Thematic Fund’s co-portfolio managers, resigned from his position in January. The fund’s other portfolio manager, Richard Maraviglia, left recently, according to people familiar with the matter.

After publication of this article Friday, a representative for Carlson said that Mr. Maraviglia is still at the company.

Both Mr. Barkoff and Mr. Maraviglia came to Carlson from Steve Cohen’s SAC Capital Advisors. Point72 Asset Management, Steve Cohen’s newest fund, has recently shuffled through several top fund managers.

Mr. Barkoff and Mr. Maraviglia couldn’t be reached for comment.

Jason Karp, who once worked as a portfolio manager for SAC Capital and as co-chief investment officer at Carlson, closed his own fund company, Tourbillon Capital Partners LP, in October 2018. The hedge fund had once managed $4 billion. Two other large hedge funds with lackluster performances, Highfields Capital Management and Criterion Capital Management, also returned billions of dollars to their investors around that time.

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