Atticus shuts hedge funds, to return $3B

NEW YORK (Reuters) -- Humbled hedge fund firm Atticus Capital LLC told investors Tuesday that it is closing two of its three funds and would return about $3 billion to shareholders.

Atticus founder and Chief Executive Timothy Barakett, citing "solely personal reasons," told investors in a letter that he is closing down a flagship fund and a smaller vehicle.

Atticus will continue to manage the $1.2 billion Atticus European Fund.

"After 15 years of being singularly focused on building and managing Atticus, I believe it is time to reassess my future," Barakett said in the letter, a copy of which was obtained by Reuters.

He said he would pursue philanthropic interests, establish a family office and form a charitable foundation.

Barakett said the market's recent rally let him begin liquidating "a significant amount of our holdings" and that he expects the Atticus Global portfolio will be fully liquidated by Sept. 30.

About 95% of the fund's capital will be returned by early October, with the remainder coming back after a final audit later this year.

Atticus joins a growing list of hedge fund managers shutting down after last year's turbulent markets hammered performance and spurred investors to withdraw their money.

Famed for activist campaigns targeting companies such as Deutsche Boerse, Atticus managed close to $20 billion by the end of 2007.

Yet Barakett's aggressive, lightly hedged investment strategy led to losses in the past year. The flagship Atticus Global fund lost 25% in 2008 and was down 6% this year even as the average hedge fund has rebounded.

Over the lifetime of the fund, though, Atticus Global on average climbed 19% a year, after fees, outpacing the 3.9% increase in the Standard & Poor's 500, Barakett told his investors.

Atticus was formed in 1995 and launched its first fund in 1996 with just $6 million.