Nick Graziano, a former top executive at hedge fund Corvex Management, has obtained early-stage financing from Constellation Seeding, putting his new hedge fund on track to start trading on Nov. 1, a person familiar with the matter said on Tuesday.
Greenwich, Connecticut-based Venetus Partners LP plans to invest in mid-sized North American companies, according to a presentation that Reuters saw. Like Corvex, Venetus will buy stakes in underperforming companies and push management to make improvements, using shareholder activism as a tool to boost returns. The amount of seed money Constellation invested could not be determined, and the firm was not available for comment. A Venetus spokeswoman declined to comment.
Graziano, 44, worked at Corvex for more than four years, having joined as a partner in 2010 when Keith Meister, a former top lieutenant to activist investor Carl Icahn, started the firm. He left in early 2015 to begin work on setting up Venetus, meeting with potential investors and hiring staff.
He is part of a small but growing group of managers who exited established activist funds to set up their own. In January, Paul Hilal parted ways with William Ackman's Pershing Square Capital Management and recently set up Mantle Ridge.
The Hedge Fund Research firm tracks 78 dedicated activist hedge funds. But raising money for hedge funds is becoming tougher as investors withdraw cash, complaining about costs and complexity. In the third quarter, $28 billion left, marking the biggest quarterly withdrawal since the financial crisis.
Activist funds now manage $116.4 billion in assets, down 5 percent from the end of 2015, Hedge Fund Research said.
More managers are willing to let potential investors become owners through seeding deals, which provide early-stage capital, often in exchange for an ownership stake. Protege Partners, another seeder, recently made deals with former Baupost Managing Director Miguel Fidalgo's Triarii Capital Management and former Macquarie manager David Meneret's Mill Hill Capital.
Venetus' Graziano has worked in the investment management industry for two decades, including for two of its best-known stock pickers, Icahn and Leon Cooperman.
He also has been a board member at home builder WCI Communities Inc and bed and bath textile company WestPoint Stevens. At Venetus, Graziano hired Chad Fauser, who spent nine years at Trian Fund Management, Nelson Peltz' activist fund. He will be head of research. Kristy Kennedy, who had worked at Ryan Pedlow's start-up hedge fund Two Creeks Capital Management, will be chief operating officer and chief compliance officer.