- Affiliated Managers Group, an asset manager that partners with and takes stakes in other money managers, is considering selling its majority stake in $18.5-billion hedge fund BlueMountain, Bloomberg reported.
- Just last week, AMG executives told investors on an earnings call they expected BlueMountain to meet its profitability targets by year-end. Earlier this year, AMG had to write off a $415 million loss attributed to lower performance fees from Andrew Feldstein’s firm.
- BlueMountain struggled to perform well this year, and has already closed two strategies — long-short equity and systematic equity — that the firm deemed unprofitable.
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Just one week after Affiliated Managers Group’s executives told investors that BlueMountain was on the path to hit its profitability goals by year-end, news breaks that AMG is considering selling its stake in the $18.5 billion hedge fund.
According to a Bloomberg report, no final decision has been made on AMG’s end. But the report of a possible sale comes after BlueMountain has undergone cost-savings manuevers like closing its long-short equity and systematic equity lines to increase profitability.
The manager has had a tough 2019, with its flagship fund down nearly 4% on the year, despite the average hedge fund being up roughly 8%. AMG, in filings, announced a $415 million writeoff on its stake in BlueMountain, saying performance fees had been depressed and growth expectations will be significantly lower.
The hedge fund, known for its credit strategies, also recently lost its head of fundamental credit Omar Vaishnavi, who had been with the firm for 10 years and was also a partner, and portfolio manager Eric Rains, who is joining Citadel as Ken Griffin’s firm builds out a macro team under Balyasny alum Colin Lancaster.
A representative from BlueMountain declined to comment. AMG did not immediately respond to requests for comment.
BlueMountain is also one of the several hedge funds to make big investments into California utility PG&E, which has been found to be responsible for several of the state’s massive wildfires, like 2017’s Tubbs Fire and 2018’s Camp Fire. The firm settled with PG&E earlier this year to get a new independent director on the utility’s board, and a source close to the hedge fund said the firm’s position in the utility is up for the year.
See Also:
- BlueMountain’s head of fundamental credit is leaving the firm. Here’s one of the last investments he pitched.
- Humans are beating machines, and Pershing Square and Greenlight are crushing it. Here’s how hedge funds performed in the first half.
- $3.2 billion cyber company Cloudflare is eyeing a September IPO, just months after raising an $150 million funding round
Source: Business Insider – bsaacks@businessinsider.com (Bradley Saacks)