The move also follows the recent departure of Diana Amoa who had joined Kirkoswald in 2021 to build a long-biased investment business.
After the acquisition, Mr Coffey will continue to be the chief investment officer and chief executive officer, focused solely on his hedge fund strategy. Mr Franklin will be chairman of the EMSO strategies and vice chairman of Kirkoswald’s board, while Kirkoswald’s Joseph Mauro will be president of the combined business, one of the people said.
Consolidation among money managers is one top trend investors are watching for this year as the hedge-fund industry’s biggest players – after adding tens of billions of dollars in assets in recent years – look for quick ways to acquire talent.
Dmitry Balyasny, whose firm oversees $US21 billion, said in October that hedge funds will need to acquire external teams of traders in order to have enough experienced employees to push into new areas.
While developing talent internally is critical, it’s not sufficient, he said at an investor conference in Toronto. In December, Man Group said it’s open to buying businesses as the firm expands into various credit strategies.
Mr Coffey was once nicknamed the “Wizard of Oz”.
His run of stellar returns in the years before the global financial crisis and subsequent struggle before he founded Kirkoswald epitomises how rapidly fortunes can change in the hedge fund industry.
He built his reputation and fortune at hedge fund manager GLG Partners, and outperformed both financial markets and rival hedge funds in the 2005-2007 bull market.
But he resigned from GLG as his returns were starting to go down, and joined Louis Bacon’s hedge fund Moore Capital Management in 2008. During his time at Moore, Coffey’s performance failed to match his record at GLG.
Mr Coffey came out of retirement to start his hedge fund Kirkoswald in 2018 and has since grown firm-wide assets. Last year, his hedge fund barely made money, halting a four-year streak of double-digit gains.
Kirkoswald has been trying to expand its offerings. It started a strategy that allows clients daily access to their money and complies with the European Union’s UCITS Directive. It also announced plans to build a long-only fund business in 2021.
Bloomberg