Henry Swieca, co-founder of Highbridge Capital Management LLC, plans to leave the $21 billion hedge-fund firm by the end of the year, all but ending his 25-year partnership with childhood friend Glenn Dubin.
JPMorgan Chase & Co., which owned 77.5 percent of Highbridge at the end of 2008, will increase its stake by an undisclosed amount, said Mary Sedarat, a spokeswoman for the New York-based bank. Swieca, 51, and Dubin, 52, will keep a small piece of the firm they founded in 1992 after eight years running a predecessor fund.
Highbridge executives said they prepared in the past year for the departure of Swieca, who is chief investment officer. He will remain until late this year to help with the transition. When JPMorgan bought a 55 percent stake in 2004 for about $1.3 billion, the founders agreed to stay for five years. The bank said it would acquire most of the rest of New York-based Highbridge by the end of 2009.
“It doesn’t faze me at all,” said Brad Alford, head of Atlanta-based Alpha Capital Management LLC, which invests in the Highbridge Statistical Market Neutral Fund. “That firm has grown far beyond its two founders.”
Highbridge doubled its investment professionals to more than 100 in the past five years and tripled assets. The firm is run by an investment committee that after Swieca steps down will include Dubin, Todd Builione and Subu Venkataraman, chief risk officer. It also includes Carl Huttenlocher, who oversees Asian investments; Alec McAree, chief of stocks; Alain Sunier, one of the heads of statistical arbitrage; and Mark Vanacore, head of global convertible bonds and fixed-income securities.
‘Long-Term Business’
“Glenn and Henry built this firm with the goal of creating a long-term business franchise that would endure long after them,” said Builione, its chief operating officer.
Highbridge’s main hedge fund, which manages $7 billion and invests in an array of strategies, fell 25 percent in 2008. It climbed 17 percent this year through May. The fund limited redemptions last year.
Clients were given about 30 percent of their money, with the remaining assets placed in a segregated portfolio, or side-pocket. Investors have now received around 80 percent of their money back.
Highbridge, which operates independently of JPMorgan, won’t name a new chief investment officer. Swieca probably will start a financial-services company after taking some time off, Builione said.
Swieca and Dubin declined to comment, Sedarat said.
Washington Heights
The two friends grew up together in Washington Heights, a neighborhood on the northern tip of Manhattan. Swieca’s parents died when he was in his late teens and Dubin’s mother and father became surrogate parents. They both went to Stony Brook University, part of the State University of New York, and roomed together during their first and second years.
They both ended up at E.F. Hutton Group in New York, where they formed a separate unit, Dubin & Swieca Capital Management, in 1984 that tracked performance of, and invested in, hedge funds. They founded Highbridge in 1992. The fund-of-funds business, renamed Corbin Capital Partners LP, is still owned by Dubin and Swieca.
Other banks have struggled running hedge funds. Citigroup Inc. agree to pay $800 million for Old Lane Partners LP, run by Vikram Pandit, in April 2007. Pandit became chief executive officer eight months later, and the fund was closed in June 2008, with Citigroup taking a $202 million writedown. The New York-based lender also shut its $2 billion Tribeca Global Investments group last year.
UBS AG, Switzerland’s largest bank, closed Dillon Read Capital Management LLC in May 2007 after it contributed $3 billion of the $19 billion in losses the bank reported that year.
JPMorgan’s asset-management unit had net income of $224 million in the first quarter, 10 percent of the bank’s earnings, and $1.5 trillion in assets under supervision.
To contact the reporters on this story: Katherine Burton in New York at kburton@bloomberg.net; Elizabeth Hester in New York at ehester@bloomberg.net.
To contact the editors responsible for this story: Larry Edelman at ledelman3@bloomberg.net; Alec D.B. McCabe at amccabe@bloomberg.net.
Source: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=anFRWcWiMH54
