What will become of Owen Li of Canarsie Capital

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Hey Guys,

Scrolling though bussines insider , this nice piece of news caught my eye:

"Hedge fund manager Owen Li sent a letter to his investors apologizing for losing all but $200,000 of the fund's capital by acting "overzealously," CNBC's Lawrence Delevingne reports.
Li, who previously worked at convicted insider trader Raj Rajaratnam's now-closed Galleon Group, is the founder of New York-based Canarsie Capital. According to CNBC, Canarsie once managed around $100 million in assets.

In the letter, Li told investors that he was "truly sorry."

"My only hope is that you understand that I acted in an attempt — however misguided — to generate higher returns for the fund and its investors," Li wrote in the letter. "But even so, I acted overzealously, causing you devastating losses for which there is no excuse.""

As a person with limited knowledge about the hedge fund industry, I'm curious to know what will be the career/life impact of this kind of downfall for the HF manager. It seems that a HFmanager with USD 100m assets under management, who loses it all, will suffer substantial consequences (career wise), but what exactly are they? How will this play out for him?

Comments (10)

 
Jan 22, 2015 - 4:15am

It's extremely unusual to see funds *completely* wiped out like this, if only because it's difficult to actually lose all of ones money unless extremely lazy/stupid/reckless (ie betting it all on a startup ice cube company). Usually what happens is large losses trigger investor redemptions, which trigger further losses and the decision is made to wind up in an orderly fashion to staunch the bleeding (as most reputable HF managers have a large portion of their own money invested in their funds and want to preserve that value).

If this guy was not providing timely/honest information to investors and continued to blindly gamble away their money unbeknownst to them, then he was deficient/negligent in his fidiciuary duty. Or he committed outright fraud. Either way, at this point his career should be the least of his concerns...he's likely to face a raft of civil (if not criminal) litigation from investors.

(Note I haven't read the story so I don't know the details)

 
Jan 23, 2015 - 6:09am

If he has any self respect, he'll transition into a different line of work, or at the very least go work as an analyst for someone else (no more pulling the trigger himself). Alas far more likely, he'll just rely on the same connections that enabled him to raise $50 million at 27 in the first place and start over again with a new high watermark and maybe a bit less leverage.

 
Feb 15, 2015 - 9:17am
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