West Palm Beach (HedgeCo.Net) – Jeff Larson, former head of the collapsed Boston based Sowood Capital Management, is in talks to launch another hedge fund. Sowood closed up shop last July after losing $1.6 billion of investors money, in what resulted in one of the biggest hedge fund debacles to date.
The new hedge fund is expected to be slightly smaller than Sowood and so far, Larson has received interest ranging from $250 million to $500 million from investors. It will be similar to Sowood’s investment strategy in that he intends to make it “market-neutral.”
Sowood used heavy leverage to invest in corporate debt, but the subprime mortgage crisis made the values of those debts plummet. The market reacted in a way which virtually made all of Larson’s hedges that he had in place, ineffective.
However, the Macalester grad is unlikely to garner support from the same investors who supported him the first time.
"You entrusted us with the management of your money, and we lost a lot of it, to say the least," Larson said. "No apology is sufficient."
Larson successfully ran the Harvard University endowment fund before starting Sowood in 2004. The endowment was Sowood’s largest client at its launch and ended up losing $350 million in the fund.
Julie Scuderi
Senior Editor for HedgeCo.Net
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