Blackstone’s second seeding fund starts with a sputter
February 21, 2012
All seven managers selected by $2.4 billion Blackstone Strategic Alliance II fell in its first calendar year.
With $2.4 billion in capital available to new managers, the Blackstone Group is the world’s largest financier of hedge fund startups, and the private equity giant had its pick of new managers to back when it began its second seeding fund in late 2010. But the fund fell 8% in 2011 as all seven of its hedge fund picks lost money, underscoring how no amount of cash or choice can eliminate the inherent risk in betting on new talent.
The 8% loss compared unfavorably with a 2011 drop of 0.47% for the AR Composite Index and a decline of 4.26% for the InvestHedge Composite Index, which tracks funds of hedge funds. Overall, the fund, Blackstone Strategic Alliance II, suffered from poor timing and the selection of strategies that were particularly affected by last year’s market volatility, according to investors familiar with the firm’s performance and that of its seeds....
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