Billionaire hedge fund manager Michael Hintze has stepped up succession planning after a turbulent year at his investment firm.
Mr. Hintze disclosed plans to form a group of senior partners at his London-based firm, CQS, according to a letter Tuesday to his clients seen by Bloomberg. The group, including Michael Peat, Soraya Chabarek, Prakash Narayanan, Craig Scordellis and Jason Walker, will share higher equity stakes and develop a firmwide strategy.
The group's "establishment reinforces our succession planning," Mr. Hintze said in the letter. "Importantly also for the future, I have stepped up our graduate recruitment program. These changes will help to secure CQS' continuing success."
That included a promotion for Chabarek, the global head of distribution, to be a member of the firm's Board Executive Committee together with Messrs. Hintze and Peat, according to the letter. A spokesman for CQS, which manages $18.7 billion, declined to comment.
Hedge funds around the world are boosting their management teams and succession planning, as they strive to build firms in a more competitive market. Peers such as Crispin Odey and Alan Howard have given up day-to-day management of their investment firms to focus on trading as rising volatility requires dedicated attention.
Mr. Hintze's move comes after his main hedge fund suffered heavy losses as his structured credit bets imploded during the swings sparked by the pandemic earlier this year. The hedge fund he personally oversees — CQS Directional Opportunities — was down 41.6% through October this year.
The CQS ABS Fund, which also suffered deep losses earlier this year, is up 37.2% since the end of March, while the CQS Global Relative Value Fund, run by Mr. Narayanan, has gained 39.4% this year, according to the letter.
The firm is also in the process of starting a number of new funds focused on asset-backed securities, collateralized debt obligations and regulatory capital markets, Mr. Hintze disclosed in the letter. CQS will start a credit strategy with $75 million of seed capital and has received a 350 million-euro ($416 million) investment mandate from an institutional client, he wrote.
CQS, which specializes in credit trading, has suffered dozens of departures this year including Mr. Hintze's longtime friend and former London Stock Exchange Group head Xavier Rolet within a year of joining the firm as its chief executive officer.
A few years ago, Mr. Hintze started to share phantom equity — giving the benefits of owning a company's stock without the actual ownership — in which staff would get 10% of the firm's economic interest, according to an investor update seen by Bloomberg. By the second half of 2019, the program had more than a dozen participants.
CQS currently employs 215 people, down from 280 at the start of December.