Hedgeweek Comment: Money talks
After the saga of Greg Coffey and GLG Partners, it is now the turn of US hedge fund manager Fortress Investment Group, which has lavished a USD300m share grant - thought to be at least one of the largest retainers of all time - on one of its star traders, 38-year-old Adam Levinson, in an effort to persuade him to stay with the company.
This giant slug of new equity in the New York-based Fortress gives Levinson, who runs one of the main funds for Fortress, a stake of up to 7 per cent in the company, correspondingly diluting the ownership of existing shareholders.
Perhaps Fortress believed that had they not tied him into the deal, he could have walked away and set up in competition with the firm. After all, Coffey walked away from a package of share options and other benefits worth USD250m when he decided earlier this year to quit GLG and start his own business.
Levinson is reported as justifying the award by arguing that he works 24 hours a day, with more than 12 hours at the office and calls through the night. He recently had his first child but says his work is more likely to wake him than the baby.
Whatever the justification of offering him such a mammoth incentive to stay, Levinson's decision raises the question as to whether he is fundamentally more conservative than Coffey, reckoning that a bird in the hand is worth two in the bush, or whether the outlook for new hedge fund start-ups has deteriorated significantly since Coffey announced his departure from GLG in April.
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