Hedge fund Three Bays Capital plans to shutter after years of weak performance, according to people with knowledge of the matter. The company, which was started in 2013 by former Highfields Capital Management money manager Matthew Sidman, will return capital to investors on Dec. 1, said one of the people, who asked not to be identified because the matter is private. Three Bays, which at its peak managed about $1.6 billion, has already liquidated the majority of its holdings, said the person.
Value investing, which was pioneered by Benjamin Graham and Warren Buffett, has struggled since 2015 as so-called growth stocks beat out their inexpensive brethren. Sidman joins a growing list of managers that have given up on the strategy. In the last week alone, Bloomberg has reported plans by both Chieftain Capital Management and SPO Partners & Co. to return client money. John Griffin closed Blue Ridge Capital last year. Another long-time value investor, Eddie Lampert, has been flailing after his bet on Sears Holdings Corp. went awry.
Performance at Three Bays, which now oversees less than $1 billion, has been flat for the last three years, and the fund fell about 4 percent this year through September, said one of the people. A representative for the Boston-based firm declined to comment. Stock-picking hedge funds gained 2.5 percent in the first nine months of the year on an asset-weighted basis, according to Hedge Fund Research Inc. They’ve lost about 5 percent in October amid the rout in equities, according to preliminary estimates by HFR.