King Street limits withdrawals from flagship hedge fund

King Street Capital Management tightened redemption terms for its flagship hedge fund, transferring investors who request withdrawals into a separate liquidation vehicle. The firm will make an initial cash distribution in the third quarter and sell the remaining assets over time, founder Brian Higgins wrote to investors.

Under the revised terms, investors requesting redemptions will receive a first cash payout in Q3; their remaining holdings will move into the liquidation vehicle, which will realize investments gradually. The firm added the arrangement is intended to avoid forced sales that could depress prices during large outflows.

The flagship strategy now manages under $8 billion, down from roughly $20 billion more than a decade ago. Across the firm, assets under management are about $30 billion, with more than 40% invested in collateralized loan obligation strategies. The flagship fund posted a 0.5% loss in the first half of 2026 after a 2.4% gain in 2025.

Earlier in 2026, Higgins appointed Domenico Lia and Jeff Rosenbaum as co-portfolio managers of the flagship fund, simplified the investment process and narrowed the firm’s focus to core credit strategies as part of a wider restructuring.

More than 40 employees left the firm this year, while King Street has recruited additional investment professionals and continues to employ around 250 people.

Higgins wrote that recent trades ‘have performed significantly better than older positions’ and noted that elevated asset valuations, macroeconomic uncertainty, persistent inflation and weakening consumer demand create opportunities for experienced credit investors.

Management added limiting redemptions will give the firm greater control over the timing and method of asset sales while it works to stabilize performance and reposition the business.