PERRY HEDGED IN

Investor to shut down 28-year-old flagship fund

The hedge fund industry’s woes have hit home for Richard Perry.

The New York hedgie told investors on Monday that he is closing down his flagship fund after 28 years, citing “unpredictable” markets.

The announcement, in a letter to investors, comes at a tumultuous time in the hedge fund industry — where performance lags the S&P 500, and the so-called “2 and 20” fee structure is under attack.

The 62-year-old investor’s firm has lost 60 percent of its assets under management over the past two years — and last year, the main fund was off 12 percent.

As of Sept. 1, the fund had $4.1 billion in assets under management and was down 2.5 percent year-to-date, according to sources.

“Although I continue to believe very strongly in our investments, process and team, the industry and market headwinds against us have been strong, and the timing for success in our positions too unpredictable,” Perry wrote.

Despite delivering an annualized return of 10.7 percent since its inception, the flagship fund’s recent performance has not been upbeat.

Perry Capital investors can expect to have a “substantial amount” of the fund’s capital returned to them next month.

The remaining assets will be sold in an “orderly fashion” to avoid moving the markets by selling them off all at once. Some of the fund’s liquid assets are expected to be sold off over the next two to three months, while others could take more than a year to unwind.

Perry expects to keep a core team in place in order to “pru- dently manage” the selling of the remaining assets.

The flagship fund had positions in Ally Financial, AIG, Ball Corp., Johnson & Johnson, St. Jude Medical and Time Warner in the most re- cent quarter, regulatory filings show.

The fund is also believed to be invested in Barneys New York, and the fate of that investment could not be learned at deadline.

Perry, married to fashion designer Lisa Perry, had been pumping money into the money-losing chain. In recent months, he had hired Goldman Sachs to shop a minority stake in the upscale retailer, according to reports.

The troubles surrounding the pop-art loving Perry could cause problems for the New York-based specialty store, which could include a second trip to bankruptcy court or a sale, say sources.

“If Perry Capital is in trouble, Barneys is in trouble,” said a source close to the luxury retailer. Further complicating matters is the fact that the leases for Barneys flagship stores in New York on Madison Avenue and in Beverly Hills are expiring by 2019 and are facing a tripling of their rents.

Barneys executives are in Milan for fashion week and unavailable for comment, said a spokeswoman.

Perry could not be reached for comment.