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UPDATE 1-Goldman's Petershill II fund takes stake in hedge fund Caxton
October 1, 2014 / 8:44 PM / in 3 years

UPDATE 1-Goldman's Petershill II fund takes stake in hedge fund Caxton

(Updates with other Petershill investments)

By Nishant Kumar and Svea Herbst-Bayliss

LONDON/BOSTON, Oct 1 (Reuters) - Goldman Sachs Group Inc has bought a 10 percent stake in hedge fund Caxton Associates, its third investment for its recently launched Petershill II fund, two sources familiar with the move said on Wednesday.

Caxton, founded 31 years ago by Bruce Kovner, manages roughly $8 billion in currencies and interest rates around the world and has returned an average 13 percent per year to clients, people familiar with the fund said.

Petershill II, which was launched earlier this year, plans to take equity stakes in established hedge funds with a strong track record.

Caxton and Goldman Sachs were not immediately available for comment.

Three years ago, Kovner handed the helm to Andrew Law, his long-time chief investment officer, making for one of the smoothest handovers to a new generation in the $3 trillion hedge fund industry.

So-called global macro hedge funds like Caxton have had a difficult time this year as a handful of prominent managers have misread global investment trends. Caxton’s returns recently improved with a well-timed bet on the U.S. dollar, but it remains down about 2 percent through the end of September.

In addition to Caxton, Goldman Sachs has made investments with credit hedge fund Knighthead Capital Management and equity long/short fund Pelham Capital.

The Petershill II fund aims to raise $1 billion and plans to make another investment by the end of the year. It said earlier that it would take stakes of 10 percent to 20 percent in established hedge funds with a strong track record.

There was no information on how much Goldman Sachs spent for the Caxton stake, which people familiar with the matter said could be raised to as much as 20 percent over time.

The current Petershill follows on the heels of the first Petershill fund, which delivered an average return of 10 percent after fees since being launched in 2007. The fund had some big winners including an investment in Winton Capital but it also had some misses including an investment made in Level Global, a hedge fund forced to shut down during the U.S. government’s insider trading investigation, and a stake in Shumway Capital which shut down in 2011. (Reporting by Nishant Kumar and Svea Herbst-Bayliss; Editing by Richard Valdmanis, Marguerita Choy and Cynthia Osterman)

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