Credit trading whiz Boaz Weinstein will have little trouble drawing investors into his new hedge fund, notwithstanding the crisis afflicting many existing fund groups.
Weinstein is set to leave Deutsche Bank early in the second quarter to head up a new hedge fund company, according to various media reports citing a Deutsche Bank spokesman. About 15 colleagues will join him in the move. That follows reports in November that the Frankfurt-based bank would eliminate about 900 jobs primarily in proprietary trading, exotic structured products and credit origination. The credit proprietary trading unit reportedly lost about $1.2 billion in the third quarter.
But prospective investors probably won't see Weinstein as leaving under a cloud. They'll more likely focus on the profits the 35-year old credit derivatives expert racked up during an 11-year climb up Deutsche's fixed-income ranks to his present role as co-head of global credit trading. For instance, Bloomberg's story about the departure includes a glowing quote from no less than William Ackman, managing partner of Pershing Square Capital Management. Deutsche itself also might invest with the new venture.
Citing unnamed sources, Bloomberg says Weinstein's New York-based group earned between $600 million and $700 million in 2007. Colin Fan, London-based global co-head of Deutsche's credit trading group alongside Weinstein, will be become sole head.
Industry-wide, the average hedge fund lost 18.3 percent last year according to Hedge Fund Research. Many funds shut down in recent months, and investors grew so skittish that even celebrated names like Tudor and Citadel had to halt withdrawals by clients.
But although fund investors are far more selective these days, they're still open to startups by marquee names with strong track records. And credit - distressed credit in particular - continues to draw capital from investors who believe astute analysis can locate bargains in the wreckage.