Marshall Weiss picks KKR executive to run US business

Hedge fund Marshall Weiss has tapped a top executive from its private equity backer KKR to run its US business.

Both firms said Monday that Todd Billione, a partner and global head of private wealth at KKR in New York, is joining Marshall Weiss as head of North America in September. He will succeed Michael Sargent, who will retire in January after nearly two decades at the firm.

Founded in 1997 by Paul Marshall and Ian Weiss, Marshall Weiss has grown into one of the world’s leading hedge funds. It is best known for its Topps market neutral fund, which analyzes buy and sell recommendations from nearly 1,000 outside analysts, and its flagship Eureka Fund, which is run by Marshall. About half of its assets are in systematic strategies that use computer algorithms.

KKR bought a 24.9 percent stake in Marshall Weiss in September 2015, an investment that Builione helped lead. It paid for the stake using its 7.4 million shares, which were then worth $147 million, and an undisclosed amount of cash from its balance sheet. Since then KKR has increased its stake to 39.9 per cent. During this roughly eight-year period, Marshall Weis’ assets under management nearly tripled, from $22bn to $62bn.

The growth of groups such as Marshall Weiss reflects how the hedge fund industry is becoming increasingly concentrated in a handful of large, diversified businesses. Rising costs of investment in technology and regulation have increased the barriers to entry for new players.

Builione already sits on the board of Marshall Weiss through its strategic partnership with KKR. He ran Highbridge Capital Management’s hedge fund business and worked at Goldman Sachs before joining the alternative giant a decade ago. In a decade at KKR, Builione has been instrumental in building the group’s credit business, which now comprises 40 per cent of its total assets.

“We look forward to working with (Todd) in his new role and deepening the strategic partnership between our firms,” ​​said Scott Nuttall, co-chief executive officer of KKR.

The management change at Marshall Weis’ North American business will not result in any change to its distribution strategy. A person familiar with the situation said most of its clients are institutional investors and the firm is not planning to go into the retail market.

Most of its funds are closed or partially closed for new money. US investors account for three-fifths of hedge fund assets globally, according to data provider Prekin.

Eureka’s performance this year has been flat, according to investors, but it has delivered an average annual gain of 8.3 per cent since its launch nearly two decades ago. Topps Market Neutral Fund is up 2.88 per cent this year and has registered an average annual gain of 9.31 per cent since its November 2007 inception.

KKR operates over $500 billion in corporate private equity investments and strategies focused on debt, infrastructure and real estate.