Multicoin LP: Why would I want to redeem my investment from Multicoin?

Original author: Soldman Gachs

Original compilation: Shenchao TechFlow

A few days ago, I participated in Multicoin’s monthly LP telephone conference. I was hesitant to write this article at first because I have been a loyal investor in their hedge funds and venture funds for many years. In the end, I decided to write anyway, and here are the key takeaways and conclusions from the call, as well as reasons why I might be redeeming my funds.

Multicoin hedge fund is down 55% this month alone. This is assuming that all assets held on FTX go to zero (frankly, now that the extent of SBF's fraud has been exposed, this is not far from the actual recovery value).

Roughly 10% of the fund's assets are managed on FTX, which means another 45% of losses come from other parts of their portfolio. The main reason for this is their irresponsible long positions on $SOL.

I think Multicoin has been reckless in managing the fund, they didn't act quickly when things happened, and they publicly supported SBF and FTX, in the call All talking about their reasons for their actions and decisions, and frankly, they have very little remorse for the damage done, which honestly would have been painful to listen to.

They say they are the largest investor in the fund and remain committed to earning back investors' money. They said the management companies were cash flow positive even after the massive drawdown, suggesting that management fees, which managers can make a fortune from, are too high.

They charged a large performance fee in previous years, which is why they are the largest investor in the fund. If they decide to close the fund, they can take the money with them (that's the industry standard by the way).

The fund has high water marks which means they have to earn back their losses in order to charge performance fees, but they continue to charge monthly management fee.

Finally, they shared the changes they will be making, namely that they will take assets off exchanges at least every 48 hours, which will hopefully ease future encounters Similar to the situation with FTX. However, they didn’t address their strategy of irresponsibly holding large concentrated positions in tokens like $SOL, which was a much bigger drag on performance than FTX’s failure.

By the way, other large positions held by Multicoin (publicly disclosed): ETH, HNT, MATIC, and FIL.

Multicoin Fund’s results largely track Solana’s performance, which has been declining since November. They have a 2-year lock-up period for investors before December 2021, and only 12.5% per quarter for investors investing after January 2022.

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