Morgan Stanley Buys into Fourth Hedge Fund

Stephen Harris

5 December 2006

Morgan Stanley has bought a substantial stake in a New York-based hedge fund Brookville Capital Management, taking the number of investments the bank has made in alternatives businesses to four in two months. Morgan has acquired almost all the assets of Brookville, which specialises in US distressed and special situations investments with approximately $221 million in assets under management. Brookville was established in 2002 by former Bankers Trust employees David Reiss, Jacob Gulkowitz and Abraham Gulkowitz. Morgan Stanley recently took a 19 per cent stake in Lansdowne Partners, which has around $12 billion in clients’ assets, along with 20 per cent of Avenue Capital, a US distressed debt investors with $12 billion of assets. The bank also took a controlling interest in FrontPoint, a $5.5 billion US hedge fund manager, for about $400 million. According to Owen Thomas, president and chief operating officer of Morgan Stanley Investment Management, the asset manager has a target of three to five years to be an industry leader, the first choice for clients and to deliver value to Morgan Stanley shareholders.