NEW YORK — Assets under management by Hennessee Group LLC have dropped 70% to $408 million at year-end 2005, down from $1.35 billion a year earlier, according to investment adviser disclosure forms filed with the Securities and Exchange Commission.
In fact, assets dropped well below the $600 million the hedge fund advisory firm started out with when it opened its doors in August 1997. That's when managing principals E. Lee Hennessee and Charles Gradante spun their hedge fund research and advisory practice, Hennessee Hedge Fund Advisory Group, out of Weiss, Peck & Greer, New York.
Hennessee maintains a database with information about 3,000 hedge funds as well as a hedge fund index and provides clients with manager selection for direct investments.
The firm's change in fortunes can be traced to the demise last year of Stamford, Conn.-based hedge fund Bayou Management LLC, whose principals, Samuel Israel III and Daniel Marino, pleaded guilty to federal criminal fraud charges. Hennessee clients had about $70 million invested with Bayou. Of the $450 million in Bayou's four hedge funds, only about $100 million has been recovered, according to a statement from Jenner & Block LLP, New York. Jeff J. Marwell, a Jenner & Block partner, was appointed receiver for Bayou's remaining assets on April 28.
Hennessee Group is down to 53 clients from 100, according to 2005 and 2004 SEC filings, and the roster was never heavy on institutional clients. Neither Ms. Hennessee nor Mr. Gradante returned calls seeking information.