Corbin Capital Partners CEO and managing partner Tracy Stuart is plotting the next evolution of the alternatives firm: becoming independent by buying back a minority ownership stake held by Avenue Capital founders Marc Lasry and Sonia Gardner.
"We’re thrilled about this," Stuart said in an exclusive interview with Pensions & Investments. Corbin completed the buyout Jan. 6, and Stuart said it achieves "a longstanding goal to be employee owned. I joined in 2004 and we always aspired to be independent."
In 2021, Gardner and Lasry financed Corbin Capital's deal to buy out the original founders.
"They agreed and expected we could buy them out. It was a pre-baked formula. It was completed with debt financing and mutually beneficial for all parties," she said. Apogem Capital assisted with the debt financing allowing the buyout of Gardner and Lasry.
Terms of the current deal and the 2021 deal were not disclosed.
"Going forward, we can be employee owned, and this deal marks us as a majority women-owned firm. Women at Corbin, including myself and others, own more than 50%" of the company, said Stuart, who was named one of P&I's Influential Women in Institutional Investing in 2024.
Stuart joined Corbin in 2004 when it was known as a hedge fund of funds firm and investors typically accessed the industry through commingled funds. She’s had a front-row seat to the changes in the alternatives industry over the last 20 years.
“We don’t even use the fund of funds language, because really, I don’t think it’s a thing anymore. I don’t think it exists. I think the industry has sort of died,” she said.
Stuart said there’s a handful of alternatives investment firms, Corbin included, that manage multistrategy hedge fund portfolios for clients in “different forms and flavors,” that are more customized today than they are commingled.
“There’s a lot of clients that want hedge fund exposure that aren’t going to do it themselves, aren’t going to build their own portfolios,” she said, adding that “there’s still a big market for, or demand, if you will, for investment firms that know how to manage those portfolios well and have done it. So that’s not going away.”
But Stuart said, “everything evolves.” And the edge 20 years ago of being a day one investor in a small, new equity hedge fund has dissipated. “Right now, to be a small firm, hedge fund, or otherwise, is very hard,” she said.
These days she sees growth in custom portfolios and private credit for Corbin.
Allocations from public pensions have focused on private credit. The Omaha Public Power District Retirement Plan selected Corbin as one its private credit managers in June 2022. And the Santa Clara Valley Transportation Authority made a March 2022 allocation to Corbin Private Credit II, according to plan documents.
Corbin has $9.5 billion in assets under management as of Dec. 31 with a nearly even split between custom and commingled strategies.
Of that, approximately $3.5 billion is in opportunistic and private credit strategies and approximately $6 billion in multistrategy hedge funds, including a $193 million multimanager equity platform that Stuart describes as being akin to “a pod shop,” and $45 million in a sustainability-focused strategy.
Deeper into credit
Corbin dove deeper into credit following the 2008 global financial crisis, including secondaries and jumped into litigation finance about six years ago as well as co-investing. Corbin has invested over $500 million in litigation finance since 2018, she said.
Corbin’s focus in private credit, Stuart said, has been lower middle market corporate credit with companies in the EBITDA range of $50 million to $75 million, “the size of the loans to them are typically too small for the large credit funds, and they need to borrow money,” she said.
And the lower middle market is an “interesting” space where not as many market participants are focused, she added.
“There's just not that many participants, and we've been doing it for so long that we're plugged in,” she said.
Another area Stuart said she has been spending considerable time on has been examining the data and growing academic work that is focusing on firm culture.
“If you look at an industry where everyone says your only asset is your people, but no one talks about what you're doing, how you're doing, it's too soft. And now finally, people are taking it seriously. I love that,” she said.
For Stuart, a uniting theme over the past two decades has been to be “very active, very engaged.” Twenty years ago that meant investing day one with a new hedge fund spinning out of a well-known shop.
“That was different and new and scary, but we if we could do the work and figure it out and get conviction, we do it. So, I think it's similar mindset,” she said about the spectrum of credit investing today.