The Morning Brief: Blackstone’s New Hedge Fund Almost Set for Takeoff
The Blackstone Group is set to go live with its new “big bet” hedge fund next month, after five years in the making. The Wall Street Journal reports that the $279 billion private equity firm has brought on two new portfolio managers: David Briggs, the former head of energy investments at Ziff Brothers Investments, and Billal Sikander, who had been at Serengeti Asset Management. A former head of risk management at Citadel has been hired for a management position, says the Journal. Blackstone aims to make this a multi-strategy hedge fund with traders who will invest in high-conviction ideas. The traders won’t actually be Blackstone employees but they will be obligated to exclusively manage money from Blackstone clients. The name of the New York-based fund is now official too; Blackstone Senfina Advisors. “Senfina” means “everlasting” in Esperanto.
Darden Restaurants announced yesterday that it will postpone its upcoming proxy meeting to October 10 instead of September 30; a delay that is not sitting well with the activist fund managers who have been bucking for big changes at the company. Jeffrey Smith’s Starboard Value in New York responded with a statement of its own, saying it will disclose a Darden turnaround plan shortly and accusing Darden of “yet another attempt to manipulate the corporate machinery.” Starboard also filed SEC paperwork yesterday that includes a list of 12 nominees for the Darden board. Smith himself is one of the nominees, along with Alan Stillman, the chairman of Fourth Wall Restaurant Group, which owns Smith & Wollensky and other restaurant chains.
Ken Griffin’s Citadel raised more new capital in the first six months of 2014 than any other hedge fund, Bloomberg reports, with net inflows of $3.9 billion. Och-Ziff Capital Management Group was next, pulling in $3 billion in spite of a U.S. government investigation of its investments in Africa. Other big money raisers included Israel Englander’s Millennium Management, with $2.6 billion coming in; Herb Wagner’s FinePoint Capital, with $2 billion and Dmitry Balyasny’s Balyasny Asset Management, with $1.5 billion.
Sometimes it pays to invest in hedge funds that are already ahead of the pack, says Commonfund.org, but only if the manager has a record for achieving alpha. In a new study called “Chasing Winners: the Appeal and the Risk,” the Wilton, Connecticut investment advisory firm says that when institutional investors hire hedge fund managers based on high returns over a three to five year period, the returns generally fizzle out over the long term. But if the manager has been able to out-perform market benchmarks, he’s more likely to be able to continue to outperform the hedge fund industry. “It may benefit hedge fund investors…. to be particularly diligent about identifying beta-driven returns as an equity bull market turns several years old,” the study concludes.