Robert Chapman, a California hedge fund manager who raised the art of management criticism to an art form with withering management critiques of distressed companies, said he is returning money to investors and taking a break.

Chapman, 38, the founder of Chapman Capital in El Segundo, Calif., announced Monday that he will return capital from his $130 million fund and spend some time traveling the world before relaunching an offshore version of his turnaround and takeover fund in early 2006. He will wind up his current fund by early July.

"As hard as it may be to believe or understand (considering for a moment my workaholic approach with which you are probably familiar), during my life I have not spent one vacation day in Europe, South America, Africa or the Middle East," he wrote in a letter released over the weekend.

Citing a lack of value investment opportunities, he said his Chap-Cap Partners fund was already lightly invested, with about 75% in cash. It returned about 20% last year, its average return since it started trading in 1996.

He said an October surfing accident that came close to leaving him paralyzed also added to his decision.

While Chapman's operations were relatively small within the world of distressed investors, his combative public personality and acid prose kept his profile high. His last public foray was his January tilt at limping shoe retailer Footstar ( FTST), when he sent then-chairman Neele Stearns a letter announcing a takeover bid that would give him representation on the board. He said Stearns and his advisory board's responses to criticisms of the recently delisted company's management had been "borderline useless" and upbraided one septuagenarian director's failure to respond as the consequence of her "Bette Davis-like seclusion."

In a filing with the Securities and Exchange Commission, he took aim at "Footstar's misleadingly named corporate governance committee" and said its audit committee's failure to provide timely financial statements was "nothing short of absurd and an insult to shareholders' collective intelligence."

Chapman said he has already set up a fund in Bermuda that will start trading in early 2006. At least part of his planned 37-country trip will be spent scouting potential locations from which to manage the new fund. Chapman said he is considering the U.S. Virgin Islands, the Bahamas, Bermuda, Gibraltar and Costa Rica as offshore headquarters sites.

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