Andy Redleaf, founding partner and former CEO of Minneapolis hedge fund Whitebox Advisors, plans to leave the firm in August after 20 years, according to a letter sent this month to clients.
Redleaf made clients and himself untold millions for the right call early on the falling mortgage market in 2007-09.
“We will miss Andy and always be grateful to him for forging a culture of collaboration, transparency and excellence in performance,” Redleaf's six partners said in the letter, adding that Redleaf’s departure represented the culmination of several years of developing younger leaders. “We also appreciate that Andy will remain personally invested in our fund.”
Whitebox is largely a manager of alternative-investment funds that caters to affluent individual investors and institutional investors, such as pension funds.
In 2012, it became one of the few hedge funds to try to develop products for Main Street, launching Whitebox Tactical Opportunities mutual fund with a mix of commodity futures, stocks and other securities.Under then-CEO Redleaf by late 2015, Whitebox was shedding clients and liquidating three poorly performing mutual funds. The firm, has since grown from $3.85 billion to $6 billion in assets.
Redleaf said at the time that he wanted the firm to provide investments for smaller investors.
However, Redleaf picked more winning strategies than not over the years, including the last three of growth. Preqin, the private-capital analyst based in New York, reported earlier this year that the hedge fund industry in 2018 has lost billions of assets over the last three years to bad investments and customer withdrawals.
The Wall Street Journal reported that the firm’s flagship fund delivered a 2.5 percent return last year and 12.1% annualized returns since 2002. The Whitebox Relative Value Partners fund generated 16.7% annualized returns since 2001, according to private documents.
Whitebox’s better-performing recent investments include in the distressed government debt of Puerto Rico.
While most hedge-fund capital was flowing to other Puerto Rico securities, Whitebox was buying the sales-tax bonds known as Cofinas, betting that the $18 billion portfolio could be restructured ahead of and on better terms than competing debts, the Journal reported.
Whitebox was also involved in the debt restructurings of Caesars Entertainment Corp, Alpha Natural Resources and Sears Holdings.
Redleaf, who also is an owner of Park State Bank, is selling his shares in Whitebox back to the firm.
A Yale University-schooled mathematician, Redleaf, 61, is a native of St. Paul.