By Svea Herbst-Bayliss
BOSTON (Reuters) - Raveneur Investment Group, the two-year old hedge fund originally backed by Blackstone (NYSE:BX) Group, is shutting down, according to two people familiar with the situation.
New York-based Raveneur was launched in September 2014 by Mark Black with startup capital from Blackstone and PAAMCO, both large hedge fund investors known for spotting rising stars.
In the industry, Black was known as a talented distressed investor and he quickly raised $350 million from the two blue-chip investors. He kept a low profile and tried to distinguish himself by seeking longer investment horizons, people familiar with his portfolio said at the time.
By late 2016 the fund was reporting losses and both PAAMCO and Blackstone decided to pull their money out, one source said.
Calls to Raveneur were not returned.
Representatives for Blackstone and PAAMCO declined to comment.
Raveneur began trading in 2014 and ended the year with a small loss. Its returns improved in 2015 when the fund ended the year with a 1.6 percent gain even as most hedge funds lost money.
At the end of 2015, the firm was managing $491.3 million in regulatory assets as measured by the Securities and Exchange Commission, according to a filing Raveneur made in early 2016.
But returns stumbled in early 2016 and again in June 2016, taking a bite out of assets. By the end of September, Raveneur told clients that returns were off by roughly 10 percent for the year and that the firm was managing about $284.9 million.
At that time some of Raveneur's bigger investments included Boston Scientific (NYSE:BSX), Callon Petroleum, Constellation Brands Inc (NYSE:STZ) and Charter Communications (NASDAQ:CHTR), the firm told investors. Bets on Lowe's Cos and SunEdison hurt the firm.
Black previously worked at Tricadia Capital Management and Eton Park Capital Management and had generated buzz when he was setting up in 2014. His track record of making money had been strong and he was able to recruit industry veterans, including former Fortress Group chief financial officer Adam Rockfeld, to the startup.
But setting up a hedge fund has become increasingly difficult as investors show little patience for poor returns. Industry data suggest hundreds of hedge funds shut down last year, marking the biggest rate of closures since the financial crisis.