Morgan Stanley Mulling Future Of Hedge Fund Stakes

Nov 17 2010 | 2:00pm ET

The head of Morgan Stanley's asset management business reiterated that the bank may sell off its minority stakes in several hedge funds.

Gregory Fleming, who has been evaluating Morgan Stanley Investment Management's businesses since he was named president in February, said it was mulling its investments "with a goal to thoughtfully free up capital, balancing for commitments, timing and returns." He told the Bank of America Merrill Lynch Banking and Financial Services Conference that its stakes in hedge funds Avenue Capital Group, Lansdowne Partners and Traxis Partners "attract significant capital charges" under the newly-enacted Dodd-Frank financial reform law.

That law's version of the Volcker rule restricts banks' hedge fund and private equity investments to 3% of their Tier One capital.

Fleming said the performance, scalability and return on capital of the hedge fund stakes and other principal investments would help determine the direction Morgan Stanley takes.

The firm is set to add another minority hedge fund stake in the coming weeks when it spins off FrontPoint Partners, the hedge fund it acquired four years ago. Morgan Stanley plans to retain a stake in the newly-independent hedge fund for at least five years as it seeks to recoup the $400 million it paid for FrontPoint.


In Depth

Q&A: Star Mountain's Brett Hickey On Investing In 'The Growth Engine Of America'

Sep 22 2017 | 5:06pm ET

Lower middle-market companies form the economic fabric of the nation, but they can...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Don’t Overlook These 6 Hybrid Cloud Concerns

Sep 14 2017 | 6:27pm ET

Cloud-based technology solutions have made tremendous inroads into the alternative...

 

From the current issue of

Business Insider has been reporting on the unusual trading activity of a mystery trader who placed a profitable short equity bet to the tune of $21 million on the Aug. 10 move in the CBOE Volatility Index (VIX).