Steinhoff’s share-price collapse in December claimed at least one hedge fund, which elected to close after it ended the month 32.8% lower.

Kaizen Asset Management had decided to "wind down" its strategic-opportunities hedge fund as a result of underperformance and a reduction in assets to an "unsustainably low level".

"The Steinhoff scandal had a material, negative impact on the portfolio’s performance in December, given that it was one of our high-conviction positions," Kaizen, which has since closed its doors altogether, said in a note to investors.

Hedge funds differ from regular, long-only equity funds in that they use a range of tools — such as shorting, which is to bet on a stock price falling — to limit risk and reduce correlation to equity and bond markets.

These funds are able to gear positions in their portfolios (inject debt), which can magnify losses if not properly managed. The Kaizen fund in question, which ended 29.6% lower in 2017 versus the top 40’s 19.5% climb, was not the only Steinhoff casualty. Abax’s constellation hedge fund, a long/short equity fund, lost 18.7% in December and 11.9% in 2017.

Ashburton’s dynamic equity hedge fund, meanwhile, lost 11.63% in December, ending the year 39.04% lower following three years of above-benchmark returns. The fund, which had no exposure to Steinhoff, EOH, Consolidated Infrastructure Group or Resilient, was hurt by poor performance in small-and mid-cap companies.

On the other hand, Fairtree’s Assegai equity long/short fund returned 22.47% in 2017, reflecting the divergence in markets in 2017. December was a particularly binary month. Portfolios that wrongly called the ANC’s elective-conference outcome by, for example, shorting the rand or banking stocks, would also have taken a beating.

Kaizen appears to be the only asset manager that has shut down entirely, however.

The Financial Services Board’s Caroline da Silva confirmed that Kaizen had applied to lapse its licence.

The Financial Services Board had asked all asset managers to report on losses as a result of Steinhoff and would question further where losses had been significant, said Da Silva, who is the board’s deputy executive officer for financial advisory and intermediary services.

Kaizen’s strategic opportunities hedge fund had just R44m in assets at end-December. It was a qualified-investor hedge fund, meaning it could be sold only to sophisticated investors with a minimum of R1m to invest.

Kaizen was open about risks associated with its funds and investors "knew what they were getting into", said Selwyn Pillay, senior portfolio manager at Blue Ink Investments, Sanlam’s hedge fund multimanager. Blue Ink had money with Kaizen in a segregated mandate until the end of 2016. The asset manager’s founding partner, Ronnie Mazor, brought a fresh perspective to investments, Pillay said.

Blue Ink had elected to withdraw its investment following a period of underperformance and instability in the management team, after co-founder Mark Witten left late in 2016.

Kaizen’s strategic-opportunities hedge fund considerably outperformed the top 40 index from 2011 to 2014, posting a 16.6% loss in 2015 (top 40: +4.5%) and a 4.7% gain in 2016 (top 40: -4.2%).

Chief investment officer Giuseppe Jerman and Mazor, who is CEO of listed steel and aluminium company Mazor Group, declined to comment for this article. Mazor is also a director at Independent Alternatives Investment Managers.