Win Streak Ends

The fund’s assets peaked at $15 billion in 2007, when it made $1.5 billion betting against subprime mortgages, according to people familiar with the firm. The following year the fund plunged 28 percent, breaking its winning streak.

Performance rebounded for a time, then took a turn for the worse in 2014, after Paul Leff, who founded the firm with Perry, stepped back from his role as co-chief investment officer. Subsequent changes in top-level management over the next two years added to investors’ frustrations, former clients said.

David Russekoff became sole CIO after Leff’s departure, but his reign was short-lived. He left in late 2015 amid the firm’s worst year since 2008. He was replaced by a three-person investment committee composed of Todd Westhus, Maulin Shah and Todd Gjervold. Gjervold departed the firm in July, according to his profile in LinkedIn. Since the end of 2013, the fund has tumbled 18.4 percent.

In recent years the firm profited from investments in distressed Argentine and Greek sovereign bonds and preferred shares of Fannie Mae and Freddie Mac. Gains were outweighed by losses on bets including Williams Cos., Energy Transfer Equity LP, International Paper Co. and Puerto Rico.

Notable Alums

Before starting his hedge fund, Perry had a decade-long career at Goldman Sachs, where he worked on Rubin’s arbitrage desk investing in the stocks of merging companies. Rubin, who later became U.S. Treasury secretary, spawned a group of successful hedge fund managers including Frank Brosens, co-founder of Taconic Capital Advisors, and Eric Mindich of Eton Park Capital Management.

Some of Perry Capital’s best-known alumni include Christopher Hohn, who accumulated a fortune of $100 million before leaving in 2003 to found TCI Fund Management, and Alp Ercil, Perry’s former Asia head, who has raised more than $3 billion to invest in distressed assets since leaving in 2012 to start Asia Research & Capital Management.

In an interview Monday, Perry said while he is focused on the current investments, “I have this hope that someone says, ’I love what you guys did, your team did things that were completely different, and how can I participate with them in the future?’"

He added that he’s ready to provide capital and advice to Westhus and Shah, if they want to start their own businesses.