Caledonia, the high-profile Sydney-based hedge fund investing for some of Australia’s wealthiest families, has experienced over $4 billion in fund withdrawals since the start of the year. This asset outflow follows a prolonged underperformance, prompting backers to pull support. The Caledonia Global Fund, overseen by Will Vicars and Mike Messara, recorded a 21.9 per cent decline in September. Fund assets under management (AUM) shrunk from $US6.5 billion in January to $US3.5 billion by October. The fund posted a negative 32.7 per cent return for the 12 months to June 30 and lost 8.6 per cent in the first three months of the new financial year.
Caledonia operates as a hedge fund, specialising in highly concentrated investments aimed at generating long-term returns through strategic stock picking. Its recent struggles are largely attributed to the poor performance of major holdings, including American real estate platform Zillow and Flutter Entertainment, which owns betting giant Sportsbet. In a recent note to clients, Caledonia acknowledged the difficult figures but maintained confidence in its long-term strategy. “Fundamentally, nothing has changed in our assessment of the businesses we own, nor in our long-term conviction,” the firm communicated.
Zillow, Caledonia’s largest investment, has fallen almost 63 per cent over the past year due to concerns over artificial intelligence disruption and a weaker US property market. Flutter’s share price also dropped nearly 70 per cent. Even ASX-listed Light & Wonder, a former winner, is down almost 15 per cent. At an August client meeting, Messara and Vicars assured investors that current share prices did not reflect fundamentals, noting core positions traded at low price-to-earnings ratios despite expectations for strong earnings-per-share growth. This challenging environment is not unique, with other major hedge funds like GQG Partners also experiencing significant outflows amidst broader market pressures.
