Michael Gelband spent much of his career playing second fiddle to Wall Street chieftains. Now he’s stepping to the fore with the biggest hedge fund startup ever.
His firm is expected to start next month with $8 billion, according to people with knowledge of the matter. In the uneasy atmosphere of hedge funds, it’s a staggering amount. Not to mention that Gelband’s investors are paying through the nose to park money with him as other hedge funds cut fees, see assets shrink or shut altogether.
Gelband, 59, the one-time heir apparent to Millennium Management’s billionaire founder Izzy Englander, caused a stir last year after falling out with his erstwhile boss and then trying to hire away some of his traders and staffers. Some read Gelband’s decision to name his fund ExodusPoint as a stick-it-to-the-boss gesture. Now the question is whether his multi-manager firm can deliver profits to match its high-profile launch when others have tried and failed to build such eat-what-you-kill funds.
“They’re going to have to show their A-game right from day one,” said Ronan Cosgrave, a managing director at Pacific Alternative Asset Management Co., which invests in hedge funds. “They don’t have the luxury of building a track record quietly behind the scenes.”
From New York to London, Gelband has been the subject of chatter on trading desks at banks, each vying for a slice of lucrative business from his hedge fund’s 30 or so teams that start wagering in fixed-income and stock markets on June 1. Gelband, who was bond chief at Millennium, is bringing some of that firm’s DNA to ExodusPoint Capital Management: money managers will be on tight leashes making measured bets, seeking to churn out a steady stream of profits. And like Englander, Gelband won’t trade himself.
On the ninth floor of a skyscraper just off Manhattan’s Park Avenue, Gelband and his longtime colleague Hyung Soon Lee have been assembling the new firm, which will trade across multiple markets in the multi-manager model. They’ve hired 125 employees, the people said. They include former Lehman Brothers Holdings Inc. bond trading star Jon Hoffman and a handful of money managers from Man Group Plc’s GLG Partners. In addition to its London outpost, ExodusPoint plans to open offices in Asia.
Gelband declined to comment through his spokesman.
BlackRock Inc. and Blackstone Group LP are among firms putting their client’s money to work at ExodusPoint, as well as UBS Group AG and Goldman Sachs Asset Management, according to people with knowledge of the matter. Spokespeople for the firms declined to comment.
ExodusPoint is benefiting as investors move money from hedge funds that have disappointed them in recent years and after bigger firms like Millennium and Ken Griffin’s Citadel have restricted new money coming into their funds.