Saturday, 22 October 2016
Last updated 17 hours ago
Nov 1 2013 | 1:34pm ET
Ziff Brothers Investments has already given rise to one of the hedge fund industry's biggest firms. Now, the family office is giving up its own U.S. hedge fund operation to seed a host of new ones.
New York-based Ziff Brothers, which has about $10 billion in assets, will gradually close the hedge fund, which has been led, since 1999, by Ian McKinnon. The move was prompted by McKinnon's decision to retire in 2015.
The Ziff brothers feared turning over the operation to a less-experienced person. Instead, they'll spin-off some of the strategies run by McKinnon's sector heads, The Wall Street Journal reports. Ziff Brothers will retain the office's London-based hedge fund operation, which could get some of the capital currently managed by McKinnon's group.
Between 300 and 400 people work at Ziff Brothers' U.S. hedge fund business, according to the Journal.
Among those expected to strike out on their own with some of the Ziff fortune are technology trader Eli Cohen, industrials trader Parag Pande and financials trader Ryan Pedlow. Ziff Brothers has already spun off its commodities business, as off Oct. 1 called Cmdty, and its long/short credit strategy, which will debut on Jan. 1 as Chimney Rock Investments. Ziff Brothers is seeding both new firms, handing $100 million to Chimney Rock and an unknown amount to Cmdty.
The former head of Ziff Brothers' hedge-fund sector, Yen Liow, is also launching a hedge fund next year, Aravt Global, although it is unclear whether Ziff Brothers will invest with it.
Ziff Brothers may also invest with additional outside managers.
The Ziff brothers have a storied history of backing big-name managers. The trio's family office seeded Och-Ziff Capital Management in 1994 and still own 10% of the now publicly-traded, $34 billion hedge fund. Ziff Brothers has also invested with ESL Investments, Perry Capital, Pershing Square Capital Management and Starwood Capital Group.