One of London’s most successful hedge funds has declared profits of £258m, delivering a multimillion-pound windfall to its 17 partners.
Marshall Wace’s limited liability partnership reported turnover of £803m in the year ending in February 2019, a 24% increase compared with the £647m it made in 2018, according to the latest accounts.
Marshall Wace was founded in 1997 by Paul Marshall and Ian Wace. Marshall and Wace are both worth about £590m, according to the Sunday Times. The founders are politically well connected: Marshall was a a prominent donor to the campaign to leave the EU, while Wace donated to the campaign to remain.
The hedge fund manages more than $36bn (£27.8bn) in funds, making it one of the largest of its kind in the world. Hedge funds operate by making high-risk bets on stocks and other assets, which deliver outsize returns if they come off. The latest payout means members of the partnership have received more than £1bn over the last four years alone, although a small portion of the £258m windfall may have been shared with its services company.
An equal share of the earnings would equate to £14m for each member, if the services company is included. In reality, the earnings of senior members among the group are likely to be significantly higher.
Marshall Wace is one of the biggest short-sellers betting against UK companies, with shorts – a bet that a certain company’s share price will decline – against at least 33 British stocks, according to the latest disclosures to financial regulators. Those included a £52m bet against broadcaster ITV, a £66m short position against education publisher Pearson, and a £14m position against fashion retailer Asos.
Marshall Wace’s rise in turnover came as an expansion in the value of assets under management meant it raked in higher fees from its clients, while it was also able to charge higher performance fees as its investments paid off. The company, which employs about 240 staff in the UK, New York and Amsterdam, uses a mixture of human stock picking and computer-driven algorithms to choose its investments.
As well as the partnership, the management services company, Marshall Wace Asset Management Ltd, reported that it paid out dividends of £116m to its shareholders, including KKR, the American private equity firm. KKR holds a 39.6% stake in the business.
A spokesman for Marshall Wace declined to comment.