By Steve Taub
Illustration by Jonathan Bartlett
Centaurus Capital wasn't the worst-performing hedge fund firm last year by a long shot. But the London firm's event-driven fund—Centaurus Alpha—fell about 20%, leading to a mad dash for the exits by investors. With monthly liquidity for those giving three-months' notice, Centaurus received redemption notices from about half its limited partners. Like a number of other funds in such a situation, Centaurus became, as one person close to the firm notes, "a bank account."
But unlike others who continued to run their funds with fewer assets and a high-water mark to meet before earning fees again, Centaurus managers Bernard Oppetit and Randy Freeman decided to close up shop and start anew. Centaurus is one of a number of prominent hedge fund firms, including Ospraie Management, Polygon Investment Partners, Gandhara Advisors, Amber Capital and Tontine Capital, that have done the same. After...