Top Deputy Exits Aurelius Capital Amid Its Recent Stumbles
Dan Gropper, a lieutenant of founder Mark Brodsky, recently left the hedge fund, people familiar with the matter say
Aurelius Capital Management LP, a hedge fund that made its name winning a yearslong debt battle against Argentina, has lost one of its top lieutenants.
Dan Gropper, the right-hand man to founder Mark Brodsky, recently left the firm, according to people familiar with the matter.
Mr. Gropper’s departure comes as some investors have fled after the firm’s recent stumbles, according to one of the people familiar with the matter.
Aurelius and Mr. Gropper declined to comment.
The firm led by Mr. Brodsky, a former bankruptcy lawyer, and Mr. Gropper have been involved in many of the biggest battles with distressed companies and governments struggling to pay their debts over the past decade.
Like many in the hedge fund industry, Aurelius’s performance has faltered over the past two years. Hedge funds that focus on distressed debt—corporate and government bonds trading at deep discounts to their face value—have, in general, fared poorly because there have been few big bankruptcy cases.
One of the firm’s more prominent recent bets on Puerto Rico remains in the red. Even after prices of the U.S. territory’s debt surged in recent months, they haven’t recovered to levels reached when Puerto Rico filed for bankruptcy in 2017.
This summer Aurelius suffered a legal setback when a federal judge ruled against its effort to have Puerto Rico’s bankruptcy case thrown out. The firm has appealed the decision in a higher court.
A recent $1.2 billion investment in bankrupt Brazilian telecom company Oi SA also hasn’t performed well.
The value of the Aurelius Capital Partners LP fund is down about 39% over the past two years, according to government filings by Aetos Capital Distressed Investment Strategies Fund LLC, a fund invested in several distressed debt-focused hedge funds.
Hedge funds in general, including equity-focused funds, have struggled recently. In October long-short equity hedge funds had one of their worst days in seven years, Goldman Sachs told its clients.