Billionaire Ziff Brothers – Dirk Ziff, Daniel Ziff and Robert Ziff Shutting Down Their Hedge funds.
Dirk Ziff, Daniel Ziff and Robert Ziff – the billionaire Ziff brothers are shutting down the last multibillion-dollar hedge fund that invests their family fortune, one of the biggest such pots of money in the U.S.
The three brothers, heirs to the wealth created by their grandfather’s magazine-publishing empire, are shutting the second of their two hedge funds.
Dirk, Robert and Daniel Ziff, ages 50, 47 and 42 years old, respectively, are closing their London-based hedge fund after its veteran portfolio manager, David Fear, decided to strike out on his own, the people said.
Last fall, the Ziffs began closing their New York hedge fund following the unexpected decision by its longtime portfolio manager, Ian McKinnon, to retire. The firm at the time was considering putting some of the money invested by the U.S. fund with the London fund.
Instead, they are investing part of their fortune with Mr. Fear and other former employees of Ziff Brothers Investments, the family office that oversees their multibillion-dollar fortune. The brothers’ net worth is estimated by Forbes at more than $14 billion.
ZBI doesn’t manage outside money. But with billions of dollars under management, the funds were larger than many hedge funds with outside investors and hedge funds run by a family office.
The funds provided trading commissions to banks and helped bring the firm’s head count to 300 to 400 people in recent years.
The vast majority of people have now left or been laid off, and commissions are likely to shrink with the funds’ closures.
The firm’s hedge funds together managed between $5 billion and $10 billion in recent years, according to people familiar with the firm, not including funds borrowed from banks to amplify wagers. The funds bet on and against stocks and were market-neutral, seeking to have no net exposure to the stock market.
In a shift from the consensus-driven approach they have taken since launching in 1992, the siblings will begin making some investments independently of one another.
But with the brothers getting older and having stronger views about their interests, making decisions by consensus was proving to be limiting.
The funds closures also follow a lackluster period for market-neutral funds. Last year, when the S&P 500 gained 32.4%, including dividends, a strong return for market-neutral funds was 6%, hedge fund investors say.
The ZBI funds were profitable under Messrs. McKinnon and Fear, including in the period after 2008, said a person familiar with the firm, saying that performance wasn’t a factor in their closing. Still, some outside observers say, fatter returns can be had elsewhere.
The past few months have been described as a difficult time for the Ziff brothers, a prominent family in the hedge fund industry known for backing some of Wall Street’s biggest names.
They have dealt with changes as they arose, rather than executed a strategic plan they had envisioned, people familiar with the firm said.
ZBI started out backing other hedge funds before it began trading its own money in 1999. Their roster of managers included William Ackman, James Chanos, Richard Perry and Daniel Och, whose firm bears their name. (The Ziffs have been reducing their stake in Och-Ziff Capital Management Group LLC and now own less than 10%.)
The Ziffs plan to invest with the former head of the Hong Kong office, Norwegian Gregard Heje, whose Kontiki Capital Management is expected to launch in June. ZBI closed its Geneva and Hong Kong offices late last year.
Mr. Fear is expected to leave the firm this year and take most of ZBI’s London office with him, said people familiar with his plans. The portfolio should be unwound by this summer.
Both of the exiting portfolio managers are particularly close to Dirk Ziff. Mr. McKinnon, sometimes described as the fourth brother, went to Harvard Business School with Dirk and has been at ZBI since 1995. Mr. McKinnon is expected to retire this year to start his own family office