Glenview Capital Lost $2 Billion in Assets in About Nine Months

(Bloomberg) -- Glenview Capital Management lost about $2 billion in assets in less than a year as investors fled a fund that began charging fees after it was initially free.

The hedge fund firm founded by Larry Robbins managed $7.7 billion as of March 1, according to a regulatory filing, down from $10 billion in June of last year. At its peak in 2017, the firm ran about $12 billion.

The redemptions mostly come from the GCM Equity Fund, according to people familiar with the matter, as investors move to cheaper passive products. In June, the fund opened to new investors and offered existing clients the option to exit or start paying fees. The fund, which only takes long positions, also suffered losses last year along with Glenview's flagship hedge fund.

GCM Equity, which started in November 2015, was initially offered to clients in the flagship fund for free after it lost 18 percent that year.

GCM Equity would not charge management or incentive fees until the flagship fund recouped its high-water mark, or peak value. It reached that point after gaining more than 23 percent in 2017. In June of last year, GCM Equity began charging fees of 1 percent on assets and 20 percent of profits if the fund returned at least as much as the S&P 500 Index.

In May 2018, before it began charging fees, GCM Equity had $3.3 billion in assets, the people said. It currently manages about $1.5 billion. Most of the investors who redeemed from the fund remain in other Glenview products.

GCM Equity -- which mirrors the flagship's 20 biggest positions in stocks with more than $10 billion in market capitalization -- fell 4 percent last year, the people said. In the first four months of 2019, it rose 10.4 percent, lagging the S&P 500.

Glenview's main fund is up almost 15 percent this year through April after declining more than 16 percent in 2018, the people said.

A spokesman for New York-based Glenview, which invests in equity and fixed income markets, declined to comment.

--With assistance from Saijel Kishan.

To contact the reporter on this story: Hema Parmar in New York at hparmar6@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vincent Bielski, Alan Mirabella

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