Updated with correction
The acquisition spree of the past decade has produced mixed results for acquirers of hedge funds and funds of funds and the firms they bought.
Using growth of assets under management to gauge success, full or majority stake hedge fund purchases generally fared better than their hedge funds-of-funds deal counterparts, Pensions & Investments' analysis showed.
J.P. Morgan Asset Management's 2004 acquisition of hedge fund manager Highbridge Capital Management LLC, for example, has been a big winner, sources said. Highbridge managed $7.3 billion at the time of the acquisition, but that amount has risen to $15.4 billion as of June 30, confirmed Kristen Chambers, a JPMAM spokes-woman, in an e-mail.
Highbridge's assets were swelled by a $6 billion infusion through its own 2010 acquisition of a majority stake in Brazilian global macro hedge fund manager Gavea Investimentos, Ms. Chambers added.
Together with non-Highbridge managed strategies, New York-based JPMAM reported worldwide hedge fund assets of $26.5 billion as of June 30, making it the 10th largest hedge fund manager in P&I's annual survey of hedge fund and fund-of-funds managers.
Less successful from an asset gathering perspective was Man Group PLC's 2012 acquisition of FRM Holdings Ltd. The firm's hedge fund-of-funds assets declined 39% in the two years ended June 30.
London-based Man Group added FRM's $8 billion of hedge funds-of-funds assets to its own $11 billion fund-of-funds business for a midyear 2012 total of $19 billion.
A year later, Man Group's hedge funds of funds were down 21% to $15.1 billion as of June 30, 2013. Assets fell a further 23% to $11.5 billion as of June 30, according to P&I's 2014 data. Man Group has since added $1 billion of hedge fund-of-funds assets from its Aug. 4 acquisition of Pine Grove Asset Management LLC.
“The change in AUM is reflective less of direct redemptions than it is of the broadening of services and the types of solutions provided to clients in this evolving space,” said Michelle McCloskey, senior managing director of Man-FRM, in an e-mail.
“This change in (assets under management) can largely be attributable to the winding down of historic, legacy European commingled (hedge fund-of-funds) products,” she added. Ms. McCloskey is based in the New York office of London-based Man Group.