The San Francisco-based firm focused on picking stocks in the technology, media and telecommunications industries. It manages about $2 billion, according to people familiar with the firm. In an Oct. 4 letter, Criterion said it wasn’t satisfied with its performance, even though its long portfolio—or bets on stocks—gained more than 850% since inception, outperforming the S&P 500 by more than 550%.
Criterion said it would prefer to invest over a longer time period, from three to ten years, and hinted at the possibility of a future investment firm. “We feel compelled to realize our full potential as investors in a different construct,” Criterion said in its letter. “Rather than impose a new framework on our valued investors, we… have decided to wind down the Funds while we formulate the next chapter.”
In its letter, Criterion cited examples of bets that didn’t pan out in the short term. The firm said its early bets on Amazon.com Inc., Netflix Inc., Salesforce.com , and Tencent Holdings Ltd. TCEHY -3.26% faced significant drops ”or long periods of relative underperformance before the scale and profitability of their business models became apparent to the market. This is why we are certain the real leverage in our experience and expertise occurs over three, five and ten year investment time frames.”
The firm is owned by Christopher Lord, David Riley, Tomoko Fortune, John Micek, Jeff Sanguinet and Louis Chang. The closing comes in the same week that $12 billion Highfields Capital also became one of the largest closures in recent history.
As the year ends, hedge funds are starting to receive redemption notices from some clients and re-evaluating their future business plans. The last few years have also seen several shutdowns of well-known funds. Among them, investor Eric Mindich said he would close his $7 billion hedge-fund firmEton Park Capital Management LP in 2017 and billionaire Richard Perry announced his decision to shutter his hedge-fund firm in 2016.