BlackRock Inc. star money manager Alister Hibbert is raising $1 billion for his hedge fund following the worst ever annual loss for his equity-focused strategy.
London-based Hibbert will reopen the BlackRock Strategic Equity Hedge Fund for additional cash from the end of March, according to an investor document seen by Bloomberg. The fund had been closed to new investments since 2019.
Hibbert, who has long been one of the best-paid staffers at the world’s largest asset manager, ran $7.6 billion in the hedge fund at the end of last year. He lost 12% during 2022, the biggest decline for the fund since it started in 2011 though still better than most equity indexes, as soaring inflation and volatile markets hurt his previously reliable wagers on growth stocks.
His move comes at a challenging time for equity long-short hedge funds, which are facing an exodus of investors after years of mediocre returns. Last year, these funds suffered outflows of almost $38 billion, the most for any hedge fund strategy, according to eVestment data, as they found themselves exposed to the steepest falls on some major equity markets since the financial crisis.
“We have always sought to prove liquidity in the real world rather than rely on hypothetical projections,” the fund’s team led by Hibbert wrote in its annual letter. “In short, we see the current opportunity set ahead as a good time to offer the chance to top-up existing holdings to fundholders while continuing to evolve the client base via new client allocations.”
Hibbert is one of the few fund managers who outperformed during the bull market that ended last year. That decline reduced assets under management from about $9 billion in 2021. Still, his 325% return since launch was almost four times the gain achieved by average peers and also ahead of the S&P 500’s return during the same period.
A spokesman for BlackRock declined to comment.
The BlackRock fund’s performance also contrasts with must deeper losses at many of the world’s best-known equity-focused hedge funds. Light Street Capital Management’s hedge fund tumbled 54% in 2022, Tiger Global Management fell 56%, Lone Pine Capital’s losses hit 36%, and Whale Rock Capital Management’s fund suffered a 45% slide, Bloomberg has reported.
Hibbert started the hedge fund with just $13 million and turned it into one of the world’s largest long/short money pools, generating annualized returns of almost 14%. The fund manager, who has recorded only three annual declines in the strategy, was key to BlackRock’s expansion into active management and performance fees. He earned a nine-figure sum in 2020 — more than three times the size of Chief Executive Officer Larry Fink’s $30 million payout.
After taking an unprecedented net short stance on equities during the second quarter, the hedge fund was again mostly wagering on shares rising in the fourth quarter as inflation began to normalize, according to the investor document. It has also tightened its risk controls.
“Although the fund enters the year with a lower-than-average gross exposure, we begin 2023 with higher conviction on the opportunity set for the portfolio and with an intention to add risk opportunistically,” the team wrote. “While the short-term outlook remains less clear than usual, many of the fund’s long-standing quality compounders now price at lower valuations than a year ago and we see very attractive entry points appearing for several cyclical industries.”
This article was provided by Bloomberg News.