BlueMountain Capital Sharpens Focus on Core Strategies and Announces Management Change
October 8, 2019
BlueMountain Capital Management, LLC (BlueMountain), the alternative asset management firm acquired by Assured Guaranty on October 1, 2019, is making certain changes to its investment platform and management team. The changes are part of a planned transition of the firm’s investment focus and business model.
The firm’s Blue Mountain Credit Alternatives Master Fund L.P. (BMCA) is beginning the process of an orderly wind down. BMCA is a multi-strategy hedge fund with assets under management (AUM) of approximately $2.5 billion as of September 30, 2019. Under the wind down process, BMCA will be managed to realize assets in an orderly manner, minimize liquidation costs, and distribute the proceeds to investors. BlueMountain noted that, since inception in 2003, BMCA has delivered net returns of 177.1% cumulative and 6.7% annualized (S Class), with a Sharpe Ratio of 0.8 and a correlation to the S&P 500 of 0.2.
Additionally, consistent with the firm’s investment strengths, BlueMountain plans to launch new strategies aligned with the firm’s focus on collateralized loan obligations (CLOs) and structured finance. Such strategies will include the areas of CLO equity tranches, as well as asset-backed securities focused on private debt investments in specialty finance companies and assets. BlueMountain manages $16 billion in assets in CLOs and long-duration opportunity funds that leverage the firm’s extensive experience in corporate credit, asset-backed finance, infrastructure and healthcare. It is the 18th largest global manager of CLOs by AUM.*
“The wind down of BMCA and our plans to launch new credit-focused and opportunities platforms are consistent with BlueMountain’s sharpened focus on areas where we have the greatest expertise and growth opportunities, including CLOs, ABS, and other areas of structured and corporate finance, as well as private structured capital investments in areas such as healthcare,” said Andrew Feldstein, BlueMountain’s Chief Executive Officer and Chief Investment Officer, who also recently became Assured Guaranty’s Chief Investment Officer and Head of Asset Management. “Assured Guaranty’s investments in Blue Mountain will contribute to our continued ability to serve investors and grow our platform.”
As previously announced, Assured Guaranty is providing $90 million of working capital to BlueMountain and expects, over the next three years, to allocate $500 million of its investment portfolio to funds and investments managed by BlueMountain.
Separately, Stephen Siderow, the firm’s Co-Founder and Co-President, has informed BlueMountain that he plans to leave the firm. Mr. Siderow will continue in his current management role through the end of this year to support an orderly transition.
“I am extremely proud of our accomplishments at BlueMountain over the last 16 years. Together, we built an enduring enterprise with a reputation for innovation, excellence, and integrity in the highly competitive alternative asset management industry,” said Mr. Siderow. “This is the right time for me to consider new opportunities across my business and philanthropic interests. I’m delighted to see BlueMountain begin a new chapter as part of Assured Guaranty, and I’m confident in their vision for the business. I feel very fortunate to have had the opportunity to build BlueMountain with Andrew, whom I consider to be one of the great investors of our generation.”
Mr. Feldstein added, “Stephen infused his vision, passion, and commitment into every aspect of our culture and operations. Our partnership created an asset management firm with the strength, focus, and talent to succeed and endure. I’m grateful for his leadership, and I wish him every success in his future endeavors.”
*Source: CreditFlux CLO manager rankings as of second quarter 2019
About BlueMountain
Assured Guaranty’s BlueMountain subsidiary is a diversified alternative asset management firm managing over $18 billion of assets. BlueMountain’s diverse team of professionals in New York and London is supported by the firm’s institutionalized and proprietary infrastructure, including specialized operations and risk management technology.
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this company statement reflect Assured Guaranty’s current views with respect to future events and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. These risks and uncertainties include, but are not limited to, the impact of Assured Guaranty's acquisition of BlueMountain and its associated entities on Assured Guaranty and its relationships with its investors, regulators, rating agencies, employees and the obligors it insures and on the business of BlueMountain and its relationships with its clients and employees; the failure of Assured Guaranty to successfully integrate the business of BlueMountain; the possibility that acquisitions or alternative investments made by Assured Guaranty, including its acquisition of BlueMountain and associated entities, do not result in the benefits anticipated or subject Assured Guaranty to unanticipated consequences; the impact of BlueMountain’s announcement of the orderly wind down of BMCA and the departure of Mr. Siderow on the business of BlueMountain and its relationships with its clients and its employees; difficulties executing BlueMountain’s business strategies, including its plans to launch new credit-focused and opportunities platforms; difficulties executing Assured Guaranty’s business strategy; and other risks and uncertainties that have not been identified at this time, management’s response to these factors, and other risk factors identified in Assured Guaranty’s filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which are made as of October 8, 2019. Assured Guaranty undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.