According to Bloomberg, investors holding approximately 70% of a fund's shares have requested their money back during the latest redemption period that concluded in March, as per a regulatory filing. The fund, which returns money via a tender offer, repurchased about 7% of these shares. SkyBridge's founder, known as 'the Mooch', declined to comment on the situation. However, he has previously stated that the fund allows him to limit redemptions and that he is 'operating within the ambit of the prospectus.'
SkyBridge began limiting withdrawals two years ago during the so-called 'crypto winter', a period when the fund suffered significant losses and investors sought to exit. Since then, cryptocurrencies have bounced back. Bitcoin, for instance, surged approximately 150% in the year ending March 31, and the SkyBridge fund saw a 46.4% gain. Despite this, many clients are urging the firm's founder to stop holding their cash captive.
Hedge funds typically only restrict redemptions, a practice known as 'gating', when they hold investments that are difficult to sell and redemptions would disadvantage the remaining investors. Some hedge funds also limit redemptions during periods of poor performance to retain capital. At SkyBridge, despite a recent strong performance, including a 26% increase in the first quarter, previous losses have barely been offset. Over the five years ending March 31, the fund reported annualized returns of less than 1%.
As of the end of the year, the firm managed a total of about $2 billion, a significant decrease from its $9 billion peak in 2015. The founder is perhaps best known for his brief 11-day stint as then-President Donald Trump's communications director in July 2017. At the end of the first quarter, the fund's portfolio consisted of 57% cryptocurrency and digital assets, 21% in multistrategy funds, 7% in equity funds, and 15% in structured credit funds, according to a filing.