It was one of Asia’s most successful and profitable hedge fund firms, but Artradis’s days are up, and its funds are now to hand back investor capital, according to the specific terms that govern each of its stable of funds.
Firm COO Jim Sweeney told AsianInvestor that the decision had been taken after a period of indifferent performance, and that a group of Artradis employees plan to start up business again soon in a new venture.
There had been rumours circulating in the market since last autumn that Steve Diggle and Richard Magides were on the brink of a split, but at the time, Diggle wouldn’t comment.
The Artradis Barracuda Fund and its leveraged counterpart, the AB2 fund, which had greater concentrations and wider delta limits, took views on volatility. The latter had its golden year in 2007 and 2008 when volatility was high and it made returns of 57% and 35%, respectively.
Artradis’s assets grew to a reported $4 billion, but its successful performance turned out to be a mixed blessing. When the financial crisis hit, investors who had lost money on other investments turned to Artradis and redeemed investments en force.
Also the flagship funds were long volatility, and so when market volatility settled down from its intra-crisis spikes, the mission was somewhat thwarted, other than to take money off the table and hope for renewed volatility.
At the time, Diggle was philosophical and pointed out to AsianInvestor that he could still manage to run the firm comfortably on management fees being generated on a billion dollars.
Also in the Artradis portfolio were the ‘Naga’ suite of equities funds, a convertibles fund and the Artradis Russia Opportunities Fund, that was managed by the founder’s sibling, Martin Diggle.