The $12 billion hedge fund Third Point has been on a tear this year, with trades like a long Nikkei position and shares of Yahoo contributing to overall returns of 15 percent in its offshore fund through May.
One area that has been working less well: a specialized short book that relies on heavy research to take bearish positions on stocks. Amid a 10 percent Standard & Poor's rally this year, some of Third Point's short holdings have held it back, as even the most beaten-down companies have staged remarkable comebacks.
Against that backdrop, Jim Carruthers, the Third Point partner who handled the company's research-driven small-stock short positions from San Francisco, is retiring from the company this summer, according to a recent investor letter.
Carruthers, who joined Third Point in 2005, worked with an analyst, Scott Matagrano as a two-man team. Despite having "generated alpha for us throughout the years with his consistently original and outstanding research," Third Point chief Daniel Loeb wrote on June 11: Carruthers "and I have agreed that his strategy of focusing on smaller-cap companies would be more effective outside of Third Point, given our asset size."
Carruthers did not respond to requests for comment.