Paloma Partners Said to Add $1.3 Billion in Assets This Year

  • Founder Donald Sussman defies industry as peers lose assets
  • Investors pulled $55.9 billion from hedge funds through July

Paloma Partners has boosted assets by $1.3 billion this year, defying a flight of capital from the global hedge fund industry by investors punishing poor performance.

The firm now manages $5.3 billion, according to a person familiar with the matter who asked not to be named because the information is private. In January 2015, its assets stood at $2.3 billion. A spokesman for the Greenwich, Connecticut-based firm declined to comment.

The fund is up 2.5 percent through mid-September after gaining 11 percent in 2015. The HFRX Global Hedge Fund Index gained 0.8 percent through mid-September after losing 3.6 percent in 2015.

Paloma, founded by Donald Sussman more than three decades ago, is luring investors even as peers lose clients disappointed by the industry’s poor performance and high fees. Investors pulled an estimated $25.2 billion from hedge funds in July, the biggest monthly redemption since February 2009, according to an eVestment report. The withdrawals bring total outflows this year to $55.9 billion.

The investment firm has a history of backing hedge fund managers, including New York-based D.E. Shaw & Co. and London-based LMR Partners LLP, and often gives them hundreds of millions of dollars to invest. Typically, the managers run the money exclusively for Paloma’s fund for several years before gaining the freedom to raise external capital.

Paloma’s multi-strategy hedge fund has a large percentage of its capital allocated to quantitative strategies that use mathematical models to invest across asset classes.

Before it's here, it's on the Bloomberg Terminal.