A hedge fund connected to a legendary New York real estate family is shutting its doors to outside money amid dismal performance

A hedge fund run by the scion of New York real estate dynasty is returning money to outside investors amid poor performance, according to documents seen by Business Insider.

The fund is O-Cap Management, a small New York-based hedge fund managed by Michael Olshan.

Olshan is the son of Morton Olshan, the chairman and founder of commercial real estate giant Olshan Properties, and a former managing director at hedge fund Jana Partners.

Launched during the Great Recession, O-Cap's primary fund lost 17.7% after fees from September 2009 through the end of June this year. The S&P 500 was up 161% over the same period.

O-Cap lost 4.3% in the second quarter this year and was down 8.03% year-to-date in 2017.

Michael Olshan did not respond to calls and emails, and the fund's chief financial officer, Lloyd Jagai, hung up on a Business Insider reporter when reached by phone.

In a September letter to clients, O-Cap blamed its losses on poor market conditions, pointing to the rise of passive investment vehicles like ETFs, the disproportionate share of FAANG tech stocks in the S&P 500's gains, and an overall lack of public sector opportunities. The company was heavily exposed to energy, a bet that took a hit amid oil and gas industry turmoil, losing 8.45% in the first half of this year.

"We do not feel today's market is rife with attractive buying opportunities in the core sectors in which we focus," Michael Olshan wrote in the client letter. "In our opinion, market participants are taking on an increasing amount of risk for lower return expectations, and are doing so late in a cycle that has been characterized by strong reflation in asset prices and public equities."

"Today's public equity markets can be defined by too much capital chasing a meager set of bargains," Olshan added. "The result is increased risk taking for lower and lower return expectations."

The fund continues to manage money for Olshan and his family, and said it sees more opportunities in private company investments.

O-Cap Management is a small fund. Documents filed with the Securities and Exchange Commission say the firm held $14.1 million in gross assets in its primary fund at the end of March, 56% of which belonged to management. Management owned 5% of the smaller fund, which had $5.8 million in assets.

Olshan comes from a prestigious and successful New York business family, and O-Cap at one point had its sights set on raising as much as $1 billion, according to trade publication HFMWeek.

Morton Olshan began buying real estate properties in the 1950s and amassed an enormous portfolio of properties in Manhattan and beyond.

His first purchase was a 56-unit apartment building at 60 W. 76th St., according to a story in the Wall Street Journal from 2014. He paid $100,000, and as of a few years ago the property was worth at least $10 million.

Today, Olshan Properties owns and manages "14,000 units of multifamily, 10 million square feet of retail, 3 million square feet of office and 1,447 hotel rooms located across 11 states," according to the company's website.

Morton Olshan became a minority owner of the New York Yankees in 2000 and remains a member of the club's board of directors. He also serves as a member of The President's Council of the New York Public Library.

Andrea Olshan, Morton's daughter and Michael's older sister, runs the family real estate business today.