The article discusses BlackRock's potential acquisition of a minority stake in Millennium Management, a $72 billion hedge fund. The move is considered unusual due to BlackRock's history of acquiring and integrating target companies entirely, and Millennium's closed-door policy to new investors. The author speculates about potential motivations and analyzes the situation in light of industry trends and a ranking of influential hedge fund allocators.
One of the more intriguing storylines from hedge fund land last year was that BlackRock is in talks with Izzy Englander to buy a stake in his $72bn hedge fund, Millennium. On the face of it, it seemed weird. Really weird. BlackRock is all about industrial scale, and while Millennium is a giant of the hedge fund industry, it is a midget by BlackRock standards. The fee levels are obviously very different, but BlackRock has a bond ETF that is bigger than all of Millennium.
Moreover, the touted minority stake is odd for BlackRock, which has only ever gobbled up targets whole and quickly remade them in its own image (RIP State Street Research, MLIM, Mercury, BGI, GIP, soon HPS etc). That it is currently in the process of digesting the latter two also make the timing terrible. Most problematically, Millennium has mostly been closed to new investors for ages. Last year it completed a $10bn capital raise, but reportedly could have taken in twice that, and routinely returns profits to maintain its performance. In contrast, BlackRock is not in the business of turning down investment dollars. Sure, Englander might be on the prowl for a succession plan, but what is the motivation for BlackRock when you can’t deploy your vast, global distribution network to sell sell sell? Maybe this is a clue. FT Alphaville’s emphasis below: That’s from Alternative Fund Insight, a hedge fund site run by former Bloomberg News and EuroHedge journalist Will Wainewright, which has done a ranking of the most “influential” allocators to hedge funds. Alphaville can’t vouch for the accuracy and methodology, which seems to be based on a mix of quantitative (estimates for numbers of mandates and $$$ invested) and qualitative (“AFI’s assessment of the levels of innovation, interest and intent”) measures. But it does tally well with our understanding of the shifting dynamics behind some big hedge funds and Millennium in particular. A spokesperson for the firm declined to commen
Blackrock Millennium Management Hedge Funds Investment Acquisitions
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