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The state of Rhode Island asked the New
York-based firm to return the $60 million it had been investing
for its pension fund since 2012, spokesman Andrew Roos told
Reuters.
An official for the firm declined to comment, but a source who
requested anonymity because the hedge fund is private said
returns were down 12 percent last year.
Rhode Island's decision in November to fire Mason Capital, which
has not previously been reported, could create fresh problems
for Mason Capital. While the state's investment is relatively
small for the $9 billion fund, hedge fund managers do not like
losing pension funds as clients because their departure could
cast a shadow over a firm's overall attractiveness.
Mason Capital was hit hard in October when it lost 7 percent
after a planned merger of pharmaceuticals companies Shire Plc
and AbbVie Inc failed.
The hedge fund sold Shire shares after the two companies called
off their planned deal and failed to capture gains when the
stock price rebounded later, one source said.
In November, when many hedge funds recovered, Mason was nearly
flat, gaining just 0.03 percent as a number of energy stocks in
its portfolio were hit by falling oil prices.
Ken Garschina cofounded Mason Capital in 2000 and grew it into
an international powerhouse firm that caters mainly to
institutional clients.
That month Rhode Island's Investment Commission, which usually
holds public meetings, moved into a closed session and sealed
the minutes of its deliberations.
2014 has been a tough year for many hedge funds with the average
fund gaining only 3.57 percent, far less than the Standard &
Poor's 500 13.6 percent gain.
For Rhode Island, Mason Capital was the pension fund's first
pension fund investments but also one of its worst-performing
global equity hedge bets according data for the last five years.
The fund did boast a 22.8 percent return in 2013.
Shire has since agreed to buy U.S. group NPS Pharmaceuticals Inc
for $5.2 billion, the Dublin-based drugmaker' s biggest
acquisition yet, as it seeks to strengthen its position in the
lucrative field of medicines for rare diseases.
Shire shares were down 3.9 percent at the close in New York,
ending at $209.10.
(Reporting by Svea Herbst-Bayliss; Editing by Meredith Mazzilli
and Lisa Shumaker)
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