Exclusive: Blackstone’s Hill hands hedge fund reins to McCormick

Exclusive: Blackstone's Hill hands hedge fund reins to McCormick

2018-01-18 17:00:22

BOSTON (Reuters) – After nearly two decades of growing Blackstone Group into the world’s biggest hedge fund investor with some $74 billion in assets, J. Tomilson Hill is passing the baton.

Blackstone has promoted John McCormick to president and chief executive of Blackstone’s hedge fund unit Blackstone Alternative Asset Management (BAAM) and Hill will become its chairman, the company told Reuters on Thursday. The change is effective immediately.

Hill, who has been the face of hedge fund investing at the private equity giant since he was tapped to help put the partners’ money to work in 2000, plans to stay at Blackstone for now. He will remain a member of Blackstone’s board and keep his seat on the firm’s 11-person management committee.

By installing a younger chief at the hedge fund unit, which makes up roughly one fifth of the company’s assets, Blackstone is laying the groundwork for a generational shift in the hedge fund industry where many firms have struggled to move beyond their founders.

John McCormick, President and CEO of Blackstone Alternative Asset Management, poses for a portrait in New York, U.S., January 18, 2018. REUTERS/Lucas Jackson

“There will be a lot of continuity but that doesn’t mean it will be boring,” McCormick, 50, told Reuters. He added that Hill, who will turn 70 this year and has mentored him during his 13 years at the firm, urged him to continue shaking things up.

For a quarter of a century, Hill, who came to Blackstone after being ousted as co-chief executive at Lehman Brothers, has traveled the world adding foreign governments, sovereign wealth funds and pensions to the firm’s growing client roster.

When his clients complained about hedge funds’ hefty fees, he began pushing for cuts, and when they worried about being lumped into investment pools with everyone else, he pushed managers to create separately managed accounts. When big data crept into investing, he was among the first to make big bets on so-called quant funds like Two Sigma and Peter Muller’s PDT that rely heavily on computer models.

Along the way, he established strong ties with some of the industry’s best talents, including Paul Singer’s Elliott Management and Paul Tudor Jones’ Tudor Investment Corp.

But there have been some setbacks as well, including the shuttering of Senfina, Blackstone’s ‘big bet’ hedge fund, amid mounting double-digit losses in 2016.

Reporting by Svea Herbst-Bayliss, editing by Carmel Crimmins and Bill Rigby

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