Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Poker-playing hedgie may have overplayed hand

Screen shot of Meditor Capital Management home page
Source: Meditor

Meditor Capital Management, the London-based hedge fund firm that managed $3.1 billion as of July, is liquidating its main funds, according to a letter to investors Thursday obtained by

Meditor is up about 16 percent so far this year, but founder Talal Shakerchi cited declining opportunity for his European focused equity funds in deciding to return investor capital. He specifically noted transaction taxes, lower liquidity and new disclosure rules around short positions.

"In summary, we are no longer confident that we can continue to offer good value to our clients on our current scale," Shakerchi wrote in the letter.

It's not clear if the firm will survive after returning most capital to investors. Meditor did not immediately respond to a request for comment.

"This is yet another example of how challenging it's been on the short-side this year," Rick Teisch, director of research at fund of hedge funds Liongate Capital, said. "When high-quality shops like Meditor and Axial shut down, it makes me think that we've reached a breaking point for the equity market."

(Read more: Co-founder of $8.2B hedge fund to retire)

Shakerchi founded Meditor in 1998 and produced an enviable record of returns: Net annualized gains of 13 percent (and 18 percent gross). The firm only lost money in two calendar years, according to the letter: 5.1 percent in 2001 and 6.7 percent in 2010.

What makes that success more impressive is that other firms that have a large allocation to betting against stocks—short sellers—have suffered in recent years as the markets rallied.

(Read more: Short sellers see once in a lifetime opportunity—if they can survive)

Shakerchi is also known for his philanthropy and poker playing. In May, he reportedly lost $1.4 million playing cards in Monte Carlo during the European Poker Tour finals.

Follow Lawrence Delevinge on Twitter @ldelevigne.