Mangrove Partners is among the best performing hedge funds in recent years. It was symbolically named after a tree species that is extremely resistant, able to bear everything from storms to hurricanes. It was founded by its current president and portfolio manager, Nathaniel August, who gained valuable investing experience while working as a director at White Eagle Partners, as an Investment Analyst at K Capital Partners, as a Senior Analyst at Brahman Capital Partners, and as an Analyst at Goldman Sachs in 2010 with only $12 million in AUM. Aside from his vast experience, Nathaniel August brought something else to his fund – investing genes. Both his parents were money managers; his mother, Nancy, was one of the first female partners in Wellington Management, and his father, Donald was an original partner in Frontier Capital.
Mangrove Partners mainly relies on four core strategies: long/short, stressed and distressed, capital structure arbitrage, and liquidations and arbitrage. Mangrove Partners returned 44% annually in its first 3 years. It isn’t uncommon for small funds delivering big numbers in their first couple of years (if they are successful, they will use these return numbers to attract large amounts of capital).
Mangrove Partners continued to deliver large returns though. It returned 26.6% in 2014 and an average annual return of 20.6% for 2012-2014. The fund lost around 1.6% in 2015. However, Mangrove Partners made up for that by returning 50.6% after fees in 2016 bringing its 3-year average return to 23.3% between 2014 and 2016. As for more recent data, the fund had a return of 8.9% in 2017 and averaged 17.2% between 2015 and 2017.
Nathaniel August is an activist and special situations investors who holds a B.A. from Brown University. Below you can see several examples of Mangrove Partners’ activist campaigns.