Is Carlyle Failing at the Hedge Fund Game?


The Carlyle Group is fiercely competing against the Blackstone Group on creating the largest alternative investments powerhouse. Both firms are publicly traded. Founded as a firm purely focused on private equity buyouts, Carlyle has evolved, creating business lines in hedge funds, credit and real estate to serve its massive customer base of institutional investors. Many of the successes have fallen short in Carlyle’s numerous attempts at managing hedge funds. In July 2008, the credit crisis played a spotlight roll in generating losses for the firm’s Blue Wave hedge fund. Years later, Carlyle began investing and acquiring boutique hedge funds like Claren Road Asset Management LLC and Vermillion Asset Management LLC.

Founded in July 2005, Claren Road focuses on liquid credit investments, putting money to work in all types of assets such as distressed debt. The hedge fund was founded by former Citigroup Inc. credit traders John Eckerson, Sean Fahey, Brian Riano and Albert Marino. Carlyle then ended up buying 55% of Claren Road, which had US$ 4.5 billion in assets, to reignite its move into hedge funds. Goldman Sach’s Petershill Fund and Citigroup sold their stake in Claren Road to Carlyle. The credit hedge fund moved up in terms of assets under management. In September 2014, Claren Road’s assets peaked at US$ 8.5 billion. The fund attracted marquee U.S. institutional investors from New Jersey State Investment Council, North Carolina Retirement Systems, New Mexico Public Employees Retirement Association and Rhode Island’s pension.

Fund Name Manager Total Assets – Billions USD – June 30, 2015 Founded
Claren Road Opportunities Fund Claren Road Asset Management 1.5 2008
Claren Road Master Fund Claren Road Asset Management 3.1 2006
ESG Cross Border Equity Master Fund Ltd. Emerging Sovereign Group 3.2 2002
ESG Domestic Opportunity Master Fund Ltd Emerging Sovereign Group 1.2 2011
Emerging Sovereign Group – Various Funds Emerging Sovereign Group 0.4 2002
Various Vermillion Funds Vermillion Asset Management 1.4 2005-2015

Source: Company filings and other sources 

Bad Bet on Fannie Mae and Freddie Mac

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