U.S. Markets

Senator hedge fund's founding duo to split; Klabin will leave firm

BOSTON (Reuters) - Hedge fund Senator Investment Group told clients on Thursday that its founding partners are splitting up, ending one of the industry’s more profitable and durable professional marriages.

Alexander Klabin will be leaving the $6.9 billion Senator to “pursue a more entrepreneurial approach to investing,” the firm wrote in a letter to investors. Portions of the letter were read by investors to Reuters.

Douglas Silverman, with whom Klabin cofounded the firm 12 years ago, will stay on and run it alongside a senior executive who is being promoted. Jay Bharadwa, who currently runs Senator’s credit portfolio, will become co-chief investment officer, the firm said.

Silverman and Klabin, who graduated from Princeton University, worked together at York Capital Management and then joined forces to found Senator in 2008 with help from Blackstone Group Inc, the world’s biggest hedge fund investor.

Klabin’s departure was first reported by the Wall Street Journal.

The pair had spent a year considering options after people who knew them said tensions had been rising for some time, said two sources who were prohibited from speaking about the matter publicly.

A representative for Senator did not immediately respond to a request for comment. Klabin could not immediately be reached for comment.

In the rough and tumble hedge fund industry, Senator stood out for its strong performance which began with a 60% return the year after the pair launched operations and ended with returns of between 18.6% and 20.3% after fees in 2019, a person familiar with the returns said. There was a loss in 2018.

A number of other employees are also leaving, including Sam Siegal, who headed healthcare investments and is going to Citadel, and investor relations executive Zlata Gleason who is moving to Lone Pine Capital.

Reporting by Svea Herbst-Bayliss in Boston; Additional reporting by Lawrence Delevingne in New York; Editing by Matthew Lewis