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...

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