Ex-Fortress Macro Chief Novogratz Said To Prep $500M Cryptocurrency Fund

Sep 26 2017 | 7:25pm ET

Former Fortress Investment Group executive Mike Novogratz is reportedly entering the digital currency space with a new hedge fund that will invest in cryptocurrencies, ICOs and associated companies. 

The former macro manager will devote $150 million of his own money into the new venture, according to a Bloomberg article citing an unidentified person familiar with the plans, and aims to have $500 million in AUM by the start of next year. If realized, the asset goal would make Novogratz’s fund the largest such vehicle in the bitcoin/blockchain space to date. 

The new fund will be named the Galaxy Digital Assets Fund, the Bloomberg article continued. During an interview, Novogratz said that he expects digital currencies to become the “biggest bubble of our lifetimes” in which prices will “get way ahead of where they should be.”

For macro traders suffering under the record low volatility that has characterized the global investment environment for most of the past several years, the swings and swoons of bitcoin are undoubtedly as attractive as the ecosystem’s long-term promise. However, as Novogratz pointed out during the interview, there are challenges to trading digital currencies, including illiquidity, a shifting regulatory environment, and difficulties getting short.

The new fund will reportedly have a broad mandate within the digital currency space, the article continued, including market making and venture capital-like stakes in both startups and their initial coin offerings. Structured with traditional 2-and-20 fees and a two-year lockup, Novogratz will be joined at the new venture by former RBC Capital Markets arbitrage head Richard Tavoso and ex-Millennium Partners trader David Namdar. 

Novogratz left Fortress in October 2015 after posting two back-to-back down years managing the company’s $1.6 billion flagship Fortress Macro fund, which had more than $8 billion in AUM prior to the 2008 financial crisis. The fund, down nearly 17.5% through the first nine months of 2015, was closed concurrent with Novogratz’s departure. 

He now has approximately 20% of his considerable net worth in digital assets, the article continued, and made some $250 million from the surge in bitcoin and digital token ether during 2016 and 2017. 

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