A struggling hedge fund says it is cutting costs and still trying to find a partner

A highly-backed hedge fund that has struggled from its start says it is cutting costs as it continues to look for fresh money to buoy assets.

Folger Hill Asset Management, a Leucadia and Schonfeld-backed hedge fund firm started by Steve Cohen's former chief operating officer Sol Kumin, has reduced management headcount by 17% this year.

That's according to an April investor letter that was reviewed by Business Insider.

Several senior staffers have left the firm in recent months, including at least two portfolio managers, the director of risk and the director of investor relations as recently as last week, Business Insider previously reported.

Kumin added in the letter: "We continue to focus on Fund expenses, seeking additional measures to effectively cut costs without adversely impacting our ability to effectively run the business or diminishing the value proposition to a prospective strategic investor."

Folger Hill doesn't charge a management fee that is traditional with many hedge funds, but rather uses a so-called pass through expense model, according to marketing materials reviewed by Business Insider and people familiar with the firm. In that model, investors take on the cost of running the fund. But assets at the fund fell preciptiously last year as some investors pulled money. That means that fewer investors take on the same costs, people familiar with the firm said.

Since at least last November, as reported by Reuters, Folger Hill has been looking for a strategic partner to add capital. Folger Hill has yet to find a partner, Kumin wrote in the April letter.

"We recognize that a deal of this type is complicated and will take time to sort through all the details," Kumin wrote. "However, we are acutely aware of the importance of getting something done in the near term."

Kumin added that he expected to have a "more comprehensive update" in the second quarter and that Folger Hill was "highly encouraged by the level of interest we've received to date and by the progress made with several prospective partners."

Folger Hill's flagship fund returned 1.2% in the first quarter of this year, compared to a 6% rise in the S&P 500 and 2.5% rise in the Russell 2000 over the same period, the letter said.

"We recognize that additional work remains to be done," Kumin wrote about the performance.

The firm has struggled with performance from its start in 2015. The firm's flagship fund fell 17.6% last year and about 3.2% in 2015 , according to previous investor updates seen by Business Insider.