Pick of the bunch makes sense
Nothing indicates better how a business has matured than when established forces start buying and upstarts are willing to sell.
That's where the hedge fund business now stands. JPMorgan Chase has bought a majority stake in Highbridge and Lehman Brothers is considering adding to its 20% stake in GLG Partners. European banks have also been making this move.
By being one of the first to act JPMorgan, no stranger to losing staff to hedge funds, has had the pick of the bunch, and settled on a highly regarded firm. Highbridge has $6.6 billion in assets, runs seven strategies, relies at least as much on technology as on its staff, and has a very good track record.
On one level it's the latest response from brokers and asset managers who for years have been struggling to stem the drain of talented prop traders, portfolio managers and researchers leaving for hedge funds, which usually pay more. Until now the only serious option has been to give departing employees seed capital and to profit from their success.
It is also another step in the process of hedge funds being accepted as investment institutions. As more institutional pension, money management and insurance funds put assets into hedge funds, they demand more transparency and more risk management.