WESTPORT, Conn. – Pequot Capital Management’s top dogs have finally decided to go their separate ways.
After months of vehemently denying market speculation that a split was imminent because the hedge fund had simply gotten too big for its britches, co-founders Daniel Benton and Arthur Samberg have officially divided the firm down the middle.
Benton plans to leave the firm to form another hedge fund called Andor Capital Management, taking with him technology investments worth $7.5 billion. His departure will reportedly happen by Sept. 30.
Samberg, who is also Benton’s long-time mentor, will remain at Pequot’s helm. Both Andor and Pequot will be ranked among the top 10 largest hedge funds, according to published reports.
The two have said that the split is amicable, and Samberg has been quoted as saying that Pequot started to consider last summer how its rampant growth would change its business plan.
The split really isn’t surprising, considering rumors abound that Benton and Samberg didn’t always see eye-to-eye on the firm’s size or strategy. In fact, it has been reported that Benton often felt stifled in the past because he wanted greater responsibility in determining Pequot’s direction and wasn’t getting what he asked for.
A majority of the firm’s largest gains came from Benton’s $4 billion Pequot Technology Fund, which reportedly gained 10.9% in the first quarter and 35% last year.
Conversely, Samberg’s Pequot Partners fund has not performed quite as well. The fund, which is more focused on emerging growth investments in technology, health care and media and communications, lost 4.2% in the first quarter, but gained 14% last year.
Comparatively, the Standard & Poor’s 500 index dropped 10.1% last year and recorded a 12.1% slide in the first quarter of this year.
Nonetheless, Pequot has been a standout player, even as other high-profile hedge funds have been forced to scale back in recent years, including George Soros’ Soros Fund Management and Julian Robertson’s Tiger Management. Indeed, Pequot has nearly tripled in size in less than three years, and the firm has recently encountered difficulties managing all the money flooding its portfolio.
In light of those troubles, including Samberg’s desire to take the firm in a new direction to better deal with the overwhelming influx of money, combined with Benton’s pervasive desire to run his own firm, such a parting of ways may be best for all involved in the long run.
Neither Samberg nor Benton could be reached for comment by press time.