His fund didn’t fold btw. They sold / were forced to sell a position that was several hundred percent up at a very very bad price relative to peak. AFAIK the fund is still up on the year though.
Yes, being unable to pay margin call means your fund is folding.
It's not part of the strategy or operating agreement of a GP/LP structure to sell a specific fund to another investment firm at a discount. The fund may buy and sell assets to create returns for LPs but selling the fund itself at a discount is not a successful exit, e.g. they folded.
What happened to SA is not what anyone would call “a fund folding”. Normally you’d assume folding means the fund went bankrupt, or closed at a loss.
This fund is not closing and not on a loss. It’s not bankrupt, and apparently it is opening up new positions and continuing to invest in its main theme last I saw it in the news.
It is on a major drawdown from its peak a few months ago, but it’s still up for the year, most of its investors are likely well in the positive. If you make a huge investment and it goes up 5x before trimming its gains and ending up 100%, you’ll be annoyed, you’ll wish you sold at the top, but you’ve still doubled your money.
Getting margin called and closed this way is not the same as going bankrupt.
> Getting margin called and closed this way is not the same as going bankrupt.
Technically we don't actually know the details here since no one here is privy to the specific fund structure - which is very likely WAY more complex than reported.
So, realistically we're arguing semantics. I said it folded and for intents and purposes if you're getting margin called and have to sell, then that's folding.
Just like in poker I can fold and not play anymore and still have a stack of chips.