Robert Mercer's shunning of Milo Yiannopoulos leaves allies stunned -- but is a lawsuit to blame?

Allies of shadowy hedge fund billionaire Robert Mercer were shocked at the vehemence with which Mercer denounced provocateur Milo Yiannopoulos on Thursday, as well as Mercer's disavowal of the "alt right" movement and the white supremacist values it espouses.

"Holy sh*t!" one Yiannopoulos supporter texted to Vanity Fair's Tina Nguyen after Mercer's announcement. "I think it means Milo is officially de-funded.”

In his statement on Thursday, Mercer said, “[I]n my opinion, actions of and statements by Mr. Yiannopoulos have caused pain and divisiveness undermining the open and productive discourse that I had hoped to facilitate. I was mistaken to have supported him, and for several weeks have been in the process of severing all ties with him.”

Yiannopoulos -- whose fortunes have been spiraling downward for nearly a year -- was the subject of a BuzzFeed exposé last month that revealed his cozy relationship with white supremacists and even cozier relationship with the ghost writers who did the bulk of Yiannopoulos' writing, uncredited and largely unpaid.

Mercer's public statement from Thursday said that he is particularly bothered by accusations that he is a white supremacist.

“Of the many mischaracterizations made of me by the press, the most repugnant to me, have been the intimations that I am a white supremacist or a member of some other noxious group,” he wrote.

The Daily Beast's Matt Lewis , however, for pumping millions of dollars into his various media projects, which Lewis contends have "destroy(ed) the conservative movement."

"I’m sorry, Mr. Mercer, you don’t get to play Thoughtful Libertarian Man after bankrolling nativism, populism, and racism," Lewis said.

Others, however, dismissed Mercer's departure from Renaissance Technologies and sale of his share of Breitbart.com as a PR ploy designed to create public distance between Mercer's business reputation and the increasingly toxic "alt right" brand of white supremacy.

“This seems to me much more like Robert Mercer separating...his image from his money-making capacity than an actual disassociation with the people he funded for so long,” said former Breitbart.com editor Ben Shapiro. “The only person who’s really damaged here is Yiannopoulos. Rebekah’s gonna continue funding Breitbart, [and] there’s no repentance or shift here...it’s just a P.R. maneuver to [take] pressure off his hedge-fund investors.”

One possible reason that Mercer is urgently attempting to rehabilitate his public image is a lawsuit filed by former Renaissance Technologies partner David Magerman, who has publicly accused Mercer of being a racist.

Magerman's lawsuit revealed that Mercer told him that he believes the following things:

a) The United States began to go in the wrong direction after the passage of the Civl Rights Act in the 1960s;

b) African Americans were doing fine in the late-1950s and early-1960s before the Civil Rights Act;

c) The Civil Rights Act “infantilized” African Americas by making them dependent on government and removing any incentive to work;

d) The only racist people remaining in the United States are black; and

e) White people have no racial animus toward African Americans anymore, and if there is any, is it not something that the government should be concerned with.