Billionaire Michael Hintze's CQS is spinning off its nascent equities hedge fund business into a stand-alone firm, as it focuses on core credit strategies that have been hammered by the COVID-19 pandemic.
Paul Graham, the firm's head of equities, will leave CQS to lead the spinoff as chief executive officer, according to people with knowledge of the matter. CQS will take an equity stake in the business and allocate some capital to it, said the people, asking not to be identified because the information is private.
The abrupt move comes after sharp losses at the firm's main hedge funds in March amid the market sell-off fueled by the coronavirus. Its long-short equities business hasn't yet started a fund and the firm was recently looking to build out its share-trading offerings under plans initiated by former CEO Xavier Rolet.
Mr. Hintze is fighting to turn around poor performance at his credit-focused firm after some of its bets imploded this year. The CQS Directional Opportunities Fund that he personally manages lost about 17% last month, the people said, after shedding just over 33% in March. He also reshuffled his asset-backed securities team by appointing Jason Walker as sole chief investment officer of the strategy, after the money pool slumped a record 43.5% in March.
Roger Guy, who joined CQS's equities business as a senior adviser and non-executive chairman in January along with Mr. Graham, is also leaving to become chairman of the spun-off entity.
