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Joined Nov 11, 2007
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$BX to Start a Concentrated Bet Style Hedge Fund

Blackstone Group BX -0.30% LP is quietly laying plans to start a hedge fund that will make big, bold bets, an effort it hopes will eventually rival some of the largest firms in the business, according to people familiar with the plans.

The private-equity firm will fund several teams of traders with hundreds of millions of dollars to place a relatively small number of large, highly concentrated wagers, the people said. The strategy is notable now as many hedge funds are shying away from making such outsize bets.

Combined, the teams’ investments will form a multistrategy hedge fund to be pitched to wealthy clients. New York-based Blackstone is confident the firm can hedge the overall risks, according to people familiar with the firm’s plans.

Blackstone is aiming to rival powerhouses such as Millennium Management LLC, which has $23 billion under management; Chicago-based Citadel LLC, which has $22 billion; and the $45 billion Och-Ziff Capital Management OZM +0.22% LLC in New York.

The move fills a gap for the $272 billion-asset manager, which already boasts a lineup of private-equity funds and mutual funds. Blackstone already has the world’s biggest collection of so-called funds of funds that invest in other firms’ hedge funds and is the biggest investor in hedge funds…..”

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