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August 01, 2018  

Nut Tree Opening Door to New Investors

Jed Nussbaum’s Nut Tree Capital is reopening its fund to outside investors.

The New York distressed-debt manager stopped accepting contributions from new investors in February over concerns that assets under management were growing faster than the fund could profitably deploy fresh capital. But in a July 24 letter to limited partners, Nussbaum said Nut Tree Onshore Fund and Nut Tree Offshore Fund would admit newcomers again starting Oct. 1.

“Given our recent success finding new investment opportunities, we intend to reopen to new investors . . . but remain committed to managing our growth in a thoughtful way,” the letter said. “One of the founding tenets at Nut Tree Capital is that we operate in a size-constrained asset class and that growing too large can come at the expense of portfolio quality.”

Nut Tree Offshore Fund gained 4.1% in the first half, versus 2.7% for the S&P 500 Index. Together, the offshore and onshore versions have about $650 million under management.

The fund mainly invests in the obligations of financially stressed small and mid-size businesses. Recent investments include senior secured notes issued by American Greetings; a second-lien loan to KeyW Corp.; and a mix of bonds and hybrid securities issued by Genworth Financial.

Nussbaum launched Nut Tree in 2016 with $100 million, including seed capital from Investcorp. He previously was a partner at Redwood Capital.