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Lonestar Capital to shut down, hurt by market whipsaw

November 13, 2014

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(REUTERS) – Hedge fund Lonestar Capital Management will shut down for the second time in eight years after the fund’s performance in October dipped, hurt by the whipsaw in the market.

Jerome Simon, Lonestar’s founder, said in a letter sent to investors that the fund’s failure to get its portfolio consistently right had weighed on its performance, particularly in recent months.

Simon called the closure of the fund a “bittersweet moment,” and said its performance in October was “challenging due to intense volatility during the month.” The letter, made available to Reuters, was dated Nov. 10.

Lonestar’s main fund was down 2.4% for the year until the end of October.

The fund intends to distribute a significant portion of its limited partners capital account by the end of the year, with further distributions in the first half of 2015. It aims to return all its capital by June 30, 2015.

News of the fund’s shutdown was first reported by the Wall Street Journal, which said the final straw came late in October when the Bank of Japan unexpectedly eased its monetary policy.

A spokesperson for Lonestar declined to comment.

Simon will manage his own money from a personal office once the shutdown is complete in mid-2015, the Journal said.