Deephaven Capital Management

Last updated
Deephaven Capital Management
Type Private
Industry Hedge funds
Founded1994 (1994)
Defunct2009 (2009)
Headquarters Minnetonka, Minnesota, U.S.
AUM US$4 billion (at its peak)
Website www.deephavenfunds.com

Deephaven Capital Management, LLC was a subsidiary of Knight Capital Group that managed various hedge funds. The company was later shutdown due to poor performance blamed on prevailing macro-economic environment. [1]

Contents

History

Deephaven Capital Management was established in 1994 with $5 million in assets. It focused on event-driven funds in addition to five additional funds managed from its offices in Minnetonka, London, and Hong Kong. [1] At its peak, the company managed $4 billion in assets in six different hedge funds. [2]

The SEC investigated Deephaven Capital in 2006, accusing one of its portfolio managers of insider trading involving 19 of its Private Investment in Public Equity (PIPE) offerings. [3] The hedge fund agreed to pay the sum of $5.8 million in disgorgement, penalties and interests including $2.7 million paid for unlawful profit and $343,000 pre-judgment interest. [3] [4] The portfolio manager also paid $110,000 as part of the civil penalty. [4]

In late 2008, Deephaven froze its Global Multi-Strategy Fund with assets of $1.6 billion. [5] The fund lost 32% in 2008, which resulted in investors requesting to withdraw 30% of their funds. [6] Until then, the fund had yearly returns of 16%. In its 2008 filings, Deephaven reported a $5.7 million pretax quarterly loss, leading to a drastic slide of its $4 billion asset at the beginning of the year to $2.7 billion by October. [7] In 2009, Deephaven sold its assets in the Global Multi-Strategy Fund to Stark Investments for up to $44.5 million after an initial payment of $7.3 million. [8] [6] Upon the sale, Deephaven's remaining assets were sold off; the office furniture was sold for cents on the dollar to a local asset manager, Disciplined Growth Investors. [9]

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References

  1. 1 2 McGuire, Kara (January 31, 2008). "2 Deephaven hedge funds to close". Star Tribune. Retrieved 2022-10-14.
  2. ↑ Strasburg, Jenny. "Deephaven Shuts Hedge Fund After Redemption Requests (Update3)". Bloomberg. Retrieved 28 June 2014.
  3. 1 2 United States Congress Senate Committee on the Judiciary (2007). Illegal Insider Trading: How Widespread is the Problem and is There Adequate Criminal Enforcement? : Hearing Before the Committee on the Judiciary, United States Senate, One Hundred Ninth Congress, Second Session, September 26, 2006. Washington, D.C.: U.S. Government Printing Office. p. 140. ISBN   978-0-16-078285-5.
  4. 1 2 Jaitly, Rajiv (2016-02-04). Practical Operational Due Diligence on Hedge Funds: Processes, Procedures, and Case Studies. West Sussex: John Wiley & Sons. p. 502. ISBN   978-1-119-01875-9.
  5. ↑ "Deephaven Freezes Multistrategy Hedge Fund to Avoid Asset Sales". Bloomberg. October 31, 2008.
  6. 1 2 "Deephaven to Sell Flagship Fund". NYTimes.com. January 27, 2009.
  7. ↑ "Knight Capital's Deephaven to sell fund's assets". Reuters. 2009-01-28. Retrieved 2022-11-07.
  8. ↑ Kirchen, Rich (June 24, 2010). "Stark Investments loses president, four other partners". www.bizjournals.com. Retrieved 2022-10-14.
  9. ↑ Star Tribune, October 23, 2009 Archived January 9, 2010, at the Wayback Machine
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