Deephaven Profit Soars, Boosts Parent Knight Capital

Jan 18 2007 | 12:17pm ET

Knight Capital Group’s new investment in hedge fund Deephaven Capital Management paid off fast. Deephaven’s pre-tax profit soared fourfold last year to $27.4 million from $6.6 million in 2005, Jersey City, N.J.-based Knight said. Some $9.5 million of that went into Knight’s coffers, accounting for about one-fifth of the brokerage’s income.

In December, Deephaven chief Colin Smith and his deputies signed lucrative new employment contracts with Knight, which bought the hedge fund three years ago, putting to rest rumors that Deephaven management wanted out.

Deephaven’s assets under management leaped to $4.2 billion at the end of 2006 from $2.9 billion in 2005.

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