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Hudson Bay Capital Management

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Hudson Bay Capital Management LP
Company typePrivate
IndustryInvestment management
PredecessorGerber Asset Management
FoundedJune 2005; 19 years ago (2005-06)
Founders
  • Sander Gerber
  • Yoav Roth
HeadquartersGreenwich, Connecticut, U.S.
ProductsHedge funds
Alternative investments
AUMUS$20 billion (December 2023)
Number of employees
241 (2024)
Websitewww.hudsonbaycapital.com
Footnotes / references
[1]

Hudson Bay Capital Management (HBC) is an American multi-strategy investment management firm headquartered in Greenwich, Connecticut, with additional offices in New York, Miami, London, Hong Kong and Dubai.

The firm has no relation to Canada's more well-known Hudson's Bay Company.

Background

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In 1997, Sander Gerber, an equity options trader at American Stock Exchange started his own proprietary firm named Gerber Asset Management. In 2005, he and Yoav Roth founded Hudson Bay Capital. At the same time, Gerber Asset Management was dissolved and Hudson Bay Capital absorbed its resources and employees.[2][3][4][5]

In 2018, HBC opened a new office in London, followed by new operations in Dubai in 2023.[6][7]

In March 2020, HBC introduced a special share class based on a drawdown structure to take advantage of sharp share price decreases following then-recent historic highs.[8]

In February 2022, HBC received a $1.3 million state grant from the state of Connecticut to hire an additional 40 employees in Greenwich.[9]

In July 2024, HBC increased the lockup period for investor capital from one to two years.[10]

Firm operations

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HBC manages the bulk of its assets in the multi-strategy fund, but also invests in distressed debt and has engaged in shareholder activism.[2] Companies the firm has invested in include New York Community Bank, Plug Power, and Transocean.[2] It also provided a $155 million loan to MCR Hotels, Three Wall Capital, and Island Capital Group to refinance the Lexington Hotel .[11]

HBC has a risk framework that it calls "The Deal Code System," which was mainly designed by Gerber. It is a scalable and repeatable portfolio management system for high-conviction investing with low correlation to markets. The system is set up with thresholds that manage the returns and losses of the firm. HBC generally does not use much leverage or borrowed money, or perform risky trades.[2][3]

HBC's founder, Sander Gerber, developed the "Gerber Statistic" as a form of correlation which emphasizes movements when analyzing relationships among different assets. The Gerber Statistic is part of HBC's risk framework and the Deal Code System for portfolio strategy.[3] Gerber collaborated with Harry Markowitz, the Nobel Laureate dubbed the "father of Modern Portfolio Theory". Together, in 2022, they published three research papers which showed how the Gerber Statistic performed better than the commonly used methods for estimating asset correlation.[3][12]

Investment History

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In 2013, HBC was one of over 20 companies accused by the U.S. SEC of violating short-selling regulations, specifically Rule 105 of Regulation M. It settled with the SEC.[13][14] The settlement cost HBC almost US$950,000.[14]

HBC was an investor of Digital World Acquisition Corp., which later became Trump Media & Technology Group. Gerber himself had donated to the Donald Trump 2020 presidential campaign.[15]

In 2021 the firm produced a return of 13.5%.[3]

In February 2024, HBC raised over $800 million for a special situations fund. It was a closed-end drawdown fund that would last six years. One of its investments was New York Community Bank, which at the time was struggling and had received a $1 billion equity injection from a group of investors that included HBC.[16]

Bed Bath & Beyond

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In February 2023, HBC arranged a fundraising deal for Bed Bath & Beyond while the retailer was on the verge of bankruptcy. The deal was worth over $1 billion, with large potential upside and limited downside for HBC.[2] A month later Bed Bath & Beyond ended the deal and instead tried to sell up to $300 million of common stock in the open market. In the process of the deal termination HBC had been able to sell 300 million new common shares to the open market, in part by capitalizing on Bed Bath & Beyond's popularity as a meme stock, before for Chapter 11 bankruptcy was eventually filed in April 2023.[17][18][19] In May 2024, Bed Bath & Beyond sued to recover over $300 million of HBC's trading profits from the deal to pay off its creditors.[18][19]

References

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  1. ^ "Form ADV" (PDF). SEC. Archived (PDF) from the original on June 21, 2023. Retrieved May 11, 2024.
  2. ^ a b c d e Gladstone, Gregory Zuckerman and Alexander (February 7, 2023). "The Investor Behind the $1 Billion Bet on Bed Bath & Beyond". WSJ. Archived from the original on June 21, 2023. Retrieved May 11, 2024.
  3. ^ a b c d e McElhaney, Alicia (February 18, 2022). "A Hedge Fund Manager Reluctantly Challenged — Then Collaborated With — Harry Markowitz". Institutional Investor. Archived from the original on May 11, 2024. Retrieved May 11, 2024.
  4. ^ Harney, John (January 29, 2012). "Lauren Potter and Yoav Roth". The New York Times. ISSN 0362-4331. Archived from the original on June 22, 2023. Retrieved May 11, 2024.
  5. ^ Trincal, Emma (January 17, 2008). "Ex-Amaranth COO Joins New York HF". www.canadianhedgewatch.com. Archived from the original on June 21, 2023. Retrieved May 11, 2024.
  6. ^ Keidan, Maiya (June 6, 2018). "U.S. hedge fund Hudson Bay to open London office - sources". Reuters. Retrieved March 5, 2025.
  7. ^ Kumar, Nishant (June 12, 2023). "Hudson Bay Expands 20 Billion Hedge Fund Business to Dubai". Bloombergy. Retrieved March 5, 2025.
  8. ^ Porzecanski, Katia (March 25, 2020). "Hudson Bay Capital plans to raise funds amid 'outstanding opportunities' - BNN Bloomberg". BNN. Archived from the original on May 11, 2024. Retrieved May 11, 2024.
  9. ^ Schott, Paul (February 24, 2022). "Finance firm Hudson Bay gets $1.3 million state grant to add 40 jobs in Greenwich". CT Insider. Archived from the original on June 6, 2023. Retrieved May 11, 2024.
  10. ^ Tan, Gillian (July 23, 2024). "Hudson Bay Joins Hedge Funds Locking Up Investor Cash for Longer". Bloomberg.com. Retrieved September 5, 2024.
  11. ^ Coen, Andrew (May 2, 2024). "Hudson Bay Capital Supplies $155M Refi on The Lexington Hotel". Commercial Observer. Archived from the original on May 11, 2024. Retrieved May 11, 2024.
  12. ^ Markowitz, Harry; Ernst, Philip; Miao, Yinsen; Gerber, Sander (February 2022). "The Gerber Statistic: A Robust Co-Movement Measure for Portfolio Optimization". Portfolio Management Research. 48 (3): 87–102.
  13. ^ "Firms to pay $14M on short-selling violations". dayton-daily-news. September 18, 2013. Archived from the original on May 11, 2024. Retrieved May 11, 2024.
  14. ^ a b Rawlings, Peter (November 18, 2013). "Hudson Bay CCO Advises On Rule 105 Procedures - Document - Gale General OneFile". go.gale.com. Archived from the original on May 11, 2024. Retrieved May 11, 2024.
  15. ^ Herbst-Bayliss, Svea (October 22, 2021). "Hedge funds score unprecedented gains on Trump's SPAC deal". Reuters. Archived from the original on December 6, 2022. Retrieved June 15, 2024.
  16. ^ Hudson, Erin (April 19, 2024). "Hudson Bay Closes $800 Million Fund to Bet on Special Situations". www.bloomberg.com. Archived from the original on April 19, 2024. Retrieved May 11, 2024.
  17. ^ Gladstone, Alexander (March 30, 2023). "Bed Bath & Beyond Ends Hudson Bay Deal, Turns to Market for $300 Million to Avoid Bankruptcy". WSJ. Archived from the original on September 24, 2023. Retrieved May 11, 2024.
  18. ^ a b Weiss, Miles (May 10, 2024). "Former Bed Bath & Beyond Sues Hudson Bay for $300 Million in Trading Profits". www.bloomberg.com. Retrieved May 11, 2024.
  19. ^ a b Levine, Matt (May 10, 2024). "Bed Bath Strikes From the Beyond". www.bloomberg.com. Archived from the original on May 10, 2024. Retrieved May 11, 2024.
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