UPDATE 1-Hedge fund Taconic Capital co-founder Brody to retire
By Svea Herbst-Bayliss
BOSTON Dec 3 (Reuters) - Kenneth Brody, who co-founded Taconic Capital Advisors LP after spending decades at Goldman Sachs, told clients on Tuesday that he plans to retire from day-to-day management at the $8.2 billion hedge fund at the end of the year.
Brody, 70, co-founded the multi-strategy hedge fund in 1999 with Frank Brosens, 56, and said that he will stay on as an advisor and investor, he wrote in a letter sent to clients and seen by Reuters.
Brody's decision comes at a time a number of hedge fund founders have stepped away from their firms, raising questions among investors about the durability of the businesses and whether they can survive beyond a founder's departure.
Taconic said it has been planning for Brody's departure and that Brody's co-founder, Brosens, together with Chief Investment Officer Chris DeLong, will continue to oversee the investment team at the New York-based fund.
"Frank and I have planned for this transition over a considerable period of time, keeping your interests paramount in the process," Brody wrote, adding that the firm is well-positioned on the investment and business side.
"Our recent performance results have been strong and we are confident about the investment opportunity set available to us in the years to come," he wrote.
A source familiar with the fund said Taconic hoped its careful transition planning would spare it the large investor outflows that have followed management changes at other firms.
When Stanley Druckenmiller and Chris Shumway announced their retirements in 2010 and 2011, their firms were liquidated. Others, like Farallon Capital - which had a hand-picked successor when founder Tom Steyer left in 2012 - have seen smooth management transitions.
Taconic's wide-ranging investment choices include a big stake in General Motors stock and the fund bought up creditor claims in Icelandic banks and Lehman Brothers in the wake of the financial crisis. In the first 10 months of the year, the firm's flagship Taconic Opportunities Fund returned 13 percent, more than twice the average hedge fund's gains. Since its founding 15 years ago, the fund returned an average 8 percent per year, a person familiar with the numbers said.
After retiring, Brody said he plans to spend more time working with nonprofit organizations, especially ones focused on young people's mental and physical well-being.
Brody worked for 20 years at Goldman, Sachs & Co, where he was a member of the management committee and co-headed the firm's long-term principal investing activities.
As a leading donor to Democrats, Brody had been a top candidate to run the Treasury Department's bailout program after the financial crisis.