ESL Moved, But Staff Stayed Put

Jul 27 2012 | 11:28am ET

It seems that ESL Investments' much-ballyhooed move to Florida is less than meets the eye.

The $10.5 billion hedge fund has indeed relocated to the Sunshine State. But most of its staffers remain in Connecticut—indeed, remain in the same Greenwich offices that formerly housed ESL's offices. In fact, ESL has just two employees now, based in its new Bay Harbour, Fla., home.

But one of them is firm founder and portfolio manager Edward Lampert, who is in line to save millions of dollars in taxes by moving south; unlike Connecticut, Florida has neither income nor capital gains taxes. Lampert reportedly still splits his time between the two states.

Meanwhile, almost all of ESL's employees remain in Connecticut, where about 20 of them now work for two firms founded by former ESL CFO Adrian Maizey. And at those two firms, Rand Capital and Rand Group, the former ESLers do basically the same things they did at ESL, for ESL: The companies provide back- and middle-office functions, research and investment ideas to ESL.

Rand Capital offers research exclusively to ESL, while Rand Group plans to offer its services to other hedge funds. In addition, Maizey may start another research firm to serve other firms.

William Crowley, president and chief operating officer at ESL before the move, did not join either Rand company.

According to Hedge Fund Alert, the new structure was partly due to Lampert's desires to avoid taxes and cut costs. But it also stemmed from the fact that Maizey and most of the hedge fund's staff didn't want to move to Florida. So Maizey suggested the spin-off and outsourcing arrangement.


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

The Life Settlement: Yield For The Investor And Cash For The Consumer

Mar 31 2015 | 6:48am ET

Investors are languishing in a yield-starved, low-interest rate environment, looking...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note