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Harvard-Affiliated Hedge Fund to Shut Down

Federal Reserve Bank of Boston - HMC Office
Harvard Management Company was heavily invested in Cambridge Square Capital before the hedge fund decided to shut its doors.

Cambridge Square Capital LP, a hedge fund with extensive ties to Harvard, is closing its doors after just two years in existence.

The fund announced its decision to “terminate the business of the funds and wind up its affairs” in an April letter to investors, but did not specify the precise reason the fund is closing, the Wall Street Journal reported last week.

Harvard Management Company was heavily invested in the hedge fund. In fiscal year 2017, the University’s tax filings listed $256.6 million in assets in a Cayman Islands-based subsidiary that lists its headquarters as Cambridge Square Capital’s Boston office. Harvard’s assets in the fund declined by $11.5 million over the course of the fiscal year. The Cayman Islands-based subsidiary, the Cambridge Square Institutional Fund, was fully owned by Harvard.

Between its various entities, Cambridge Square Capital had more than $500 million under management in March 2018, according to filings with the Securities and Exchange Commission.

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Its founder, Marco Barrozo, worked at HMC for eight years, from 2007 to 2015. During his time at HMC, Barrozo worked as a managing director and was among the company’s highest-paid employees. He brought home $4.8 million in fiscal year 2013 and again in 2015, according to University tax filings.

Several of Barrozo’s partners at Cambridge Square Capital — including most of the fund’s top brass — were also former HMC employees. Apoo Koticha, an executive at the fund, was a portfolio manager at HMC from 2007 to 2014. Director of Operations Thomas Angelillo also spent nine years at HMC.

The fund had an after-fee loss of 2.5 percent in 2017 and a gain of 2 percent last year, according to the Wall Street Journal.

In recent years, under the leadership of new CEO N.P. Narvekar, HMC has shifted many of its formerly internally managed holdings to external funds, often founded by former HMC employees. In January 2017, Narvekar laid off more than 100 of its roughly 230 employees.

“We can no longer justify the organizational complexity and resources necessary to support the investing activities of these portfolios,” he wrote in a letter at the time.

Since then, HMC has invested hundreds of millions in funds started by its former external managers, and its 22-person real estate team moved to Bain Capital. Cambridge Square Capital is not among this group, having been formed well before the 2017 layoffs. HMC has stayed quiet about the exact number of employees who remain after the layoffs.

— Staff writer Luke Vrotsos can be reached at luke.vrotsos@thecrimson.com.

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