Fortress Investment Group said on Tuesday one-time star investor Michael Novogratz, who runs the firm's struggling global macro hedge fund, will leave at the end of the year and that it is buying back his shares for more than $250 million.

Novogratz, a former college wrestler and Army helicopter pilot who became one of Wall Street's most colorful investors, renowned for his blunt market assessments, is the biggest casualty of this year's downturn for hedge funds amid global market turmoil.

Fortress told investors on Monday that it planned to close the macro fund, which is nursing a 17 percent loss this year.

The investment firm will buy back 56.8 million class A shares from Novogratz at a price of $4.50 a share. The transaction will be financed with cash and a note issued to Novogratz, shrinking its dividend-paying share count by roughly 13 percent.

The company's share price climbed 5.7 percent on Tuesday to $5.75 after falling more than 5 percent in after-hours trading on Monday as news spread that Fortress would close the fund and Novogratz would leave at an unspecified time.

The global macro fund, which made bets on currencies, interest rates and stocks, had $2.3 billion in assets at the end of the second quarter, less than a third of its tally eight years ago.

The fund was launched in 2002 and reached a peak of $8 billion in assets in 2007, the year Fortress listed its shares.

The current figure makes up about 3 percent of Fortress' $72 billion in assets, not including redemption requests that investors put in as performance suffered this year.

Its contribution to earnings has been relatively small, Fortress said, noting that it accounted for roughly 2 percent in pre-tax distributable earnings in the last 12 months through the end of the second quarter.

Novogratz, 50, said it was a tough decision to close down the fund, but acknowledged the fund's heavy losses this year. "I do not believe the current environment is conducive to achieving our best results," he said.