(Bloomberg) -- Before calling it quits, hedge fund chief George Weiss searched for a buyer for his $3 billion firm — talking to prospective suitors over the past year including Millennium Management.
Weiss Multi-Strategy Advisers had lackluster returns for years and was looking for a deal, according to people familiar with the matter. It sank 0.6% in 2022, while its biggest rivals posted double-digit gains.
While the fund gained about 6% last year, it trailed its multistrategy peers and barely beat the risk-free rate of 5%. Investors’ patience for underperforming funds is thinning, as they compare the high cost of hedge fund fees with the easier and cheaper option of investing in relatively high-returning Treasuries.
Weiss, 81, told investors this month that he’s shuttering his firm and returning client cash after 46 years in business. Millennium and other hedge funds are now considering recruiting his talent, the people said. Balyasny Asset Management already hired Weiss portfolio manager Andrew O’Connor.
A representative for Weiss didn’t respond to requests for comment. Millennium declined to comment.
Weiss is at least the third multibillion-dollar hedge fund to consider being subsumed by Izzy Englander’s Millennium. Last year, discussions between the $62 billion firm and Schonfeld Strategic Partners ended abruptly after the latter firm secured billions elsewhere.
A few years ago, Millennium also approached Nick Maounis’s Verition Fund Management.
More hedge fund firms are expected to consider consolidation in 2024 as big players look to acquire talent quickly, after assets ballooned in recent years.
In October, hedge fund billionaire Dmitry Balyasny said industry giants will need to acquire external teams of traders in order to have enough experienced employees to push into new areas.
Bloomberg reported last month that macro-focused Kirkoswald Asset Management was in advanced talks to buy Emso Asset Management. The deal would create a $13 billion firm, as part of a plan to help Kirkoswald further expand into emerging markets.
In August, Weiss liquidated four trading teams: commodities, information sciences, an options trading unit and an event-driven group. The firm was concerned the units may not be scalable or profitable. Weiss added two strategies to bet on price dislocation and the consumer sector.
The firm’s predecessor, George Weiss Associates, was founded in 1978, and the multistrategy hedge fund debuted in 2006. Unlike most multistrats, it didn’t charge clients so-called pass-through fees for expenses such as compensation for top traders, research and entertainment.
“Every journey has twists and turns,” Weiss wrote in a letter to investors adding that he made the decision to close shop “after careful consideration of various factors and circumstances.”
By Hema Parmar
