A few years ago, Pequot Capital Management Inc. Chairman Art Samberg told a financial magazine his goal was to run a hedge fund that would survive its founder.
If he did not quite achieve that vision, at the very least his company”™s legacy goes forward through two offspring funds ”“ even as that legacy is still being written.
In a bombshell, Samberg informed investors late last month that he would shut down Westport-based Pequot, refunding current investments while spinning out some smaller funds.
Samberg is a giant in the hedge fund industry, having founded Pequot in October 1986 with an international long/short equity fund. Focused on finding stocks whose price did not reflect relatively strong underlying fundamentals, within 15 years the company would become the largest hedge fund operator in the world with $15 billion in assets under management.
Samberg graduated from the Massachusetts Institute of Technology in 1962 and last year was named a “life member” trustee at the school, the lone head of a Connecticut company to number among 21 people actively holding the title. He is also chairman of the MIT Investment Co.
In 1967 he earned an MBA from Columbia University, where he has served as co-chairman of the board of trustees. In 2006, Samberg gave $25 million to Columbia to create a “challenge grant” fund, in which the school could raise funds to endow faculty seats by promising to match donations with cash from Samberg”™s gift.
The Securities and Exchange Commission had been investigating whether a Pequot employee took advantage of insider information in trading shares of Microsoft Corp., where he had previously worked. After informing Pequot in 2006 that it was taking no action, the SEC reopened the probe in January without specifying a reason.
In a letter to investors late last month, Samberg attributed his decision to the SEC inquiry.
“Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction,” Samberg said, in a letter to investors printed by the Wall Street Journal and other publications. “With the situation increasingly untenable for the firm and for me, I have concluded that Pequot can no longer stay in business as an investment advisor ”¦ This has been an extremely difficult decision for me, especially because of the impact it will have on our talented and dedicated employees.
Besides Westport, Pequot has offices in New York City, Los Angeles and London. At last report, the company had 280 employees.
Pequot”™s size has changed over the years due to both marketplace dynamics and multiple spin outs it has undertaken.
In 2001, the company split into two independent entities, with Samberg retaining the Pequot name while colleague Dan Benton left to form Andor Capital Management.
Stamford-based Andor announced last October it would shut down.
Last year, the company carved out its Pequot Ventures business as an independent company called FirstMark Capital, led by CEO Lawrence Lehihan who started Pequot”™s venture capital fund in 1996. FirstMark is based in New York City.
As it winds down its business, Pequot plans to spin off its Matawin fund under Mike Corasaniti, while two more Pequot employees will take over the company”™s Special Opportunities fund.
Corasaniti joined Pequot in 2003 to head research; he had spent the previous two years with Keefe, Bruyette & Woods Inc., rebuilding that company”™s systems after 67 employees died in the 2001 World Trade Center attack.
