Morgan Stanley Hedge Funds
Morgan Stanley Unlikely to Sell Off Hedge Fund Investments
Morgan Stanley has spun off the hedge fund Frontpoint Partners that was completely owned by the investment bank, but the firm is not planning on selling off its hedge fund stakes. Morgan Stanley invested in seven hedge fund firms from 2006-2008 and continues to own minority interests in all of them.
After months of uncertainty surrounding the deal, the hedge fund FrontPoint Partners announced on Tuesday that Morgan Stanley had finished spinning it off.
“As of March 1, 2011, the FrontPoint portfolio managers and senior management team will collectively own a majority of the equity ownership interest in FrontPoint,” FrontPoint’s co-chief executives, Dan Waters and Mike Kelly, said in a letter to investors. “Morgan Stanley will retain a minority equity ownership.”
Morgan Stanley indicated last summer that it would sell back a majority stake in FrontPoint to its managers, noting that the Dodd-Frank financial regulatory overhaul restricted the bank’s outright ownership of the fund.
The sale was originally planned for the end of 2010, but the transaction was delayed by the arrest of a French doctor who was accused of leaking inside information to a hedge fund, which was later revealed to be FrontPoint. The fund quickly put a portfolio manager for its health care team on leave. Source
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