Stamford, Conn.-based DKR Capital is liquidating its USD100 million DKR Varick Fund. The USD4.2 billion hedge fund hopes to complete liquidation by year-end, at which point its five-person structured credit team will depart, according to DW sister publication Alternative Investment News. Jawahar Chirimar, head of the fund's structured credit team and former head of credit trading in Asia for Lehman Brothers (DW, 5/23/04), has been connected to a post at Citigroup. Chirimar did not return messages.
Concerns about performance--the fund is down about 7% since it launched this March--drove the decision, according to an official at DKR. The CSFB/Tremont Hedge Fund Index, for example, has fixed-income arbitrage--the strategy that contains structured credit--returning 49 basis points this year. Still, one investor said news of the liquidation came as a surprise. "It's not great performance, but I don't think it was so bad they had to shut it down," he said. "The fund has only been trading a couple of months. I think there was plenty of time to turn it around."
One analyst noted that although the strategy has been down most of the year, it is making a rebound. "If the fund is down 7-8%, it should be closed. Relatively speaking, they're not doing well at all and I'm sure it's not helping them increase assets." One structured credit hedge fund manager added that if DKR management can't increase the fund's assets, it is going to have a hard time competing in the space.
