Hedge funds are usually small organisations and a period of underperformance doesn’t automatically equate to job losses as is usually the case in investment banking. So it is with AKO Capital, the $9bn equity fund founded by former Egerton Capital Partner Nicolai Tangen, where profits fell by over £60m on last year but which bolstered headcount nonetheless.
AKO Capital LLP posted operating profits of £88.5m for the year to 28 February 2014, compared to £149.3m for the previous year, according to accounts released recently on Companies House.
Much of this was allocated for ‘discretionary division’ among the firm’s partners. The highest paid member received £41m this year, down from £84m in 2013. AKO added two new partners in 2014, taking the total to 20, meaning that average compensation (excluding the highest paid member) was £2.4m in 2014, compared to £3.75m in 2013.
However, outside of the upper ranks, AKO Capital has been also been hiring. It now has 28 people working in research functions, up from 20 in 2013, and it also hired two new staff in administrative functions. Staff costs increased from £1.7m in 2013 to £2.3m this year.
AKO Capital was founded by Tangen, a former partner at Egerton Capital, in 2005 and he has since amassed a personal fortune of £250m, according to the latest Sunday Times Rich List. Before joining Egerton in 1997, he headed the Nordic department at Cazenove and has since hired a number of former colleagues at AKO including Gorm Thomassen as portfolio manager and equity analysts Mike Yates and Erik Karlsson.
AKO's tendency to hire despite poorer performance echoes other UK hedge funds this year. Winton Capital Management, BlueCrest Capital Management and Capula Investment Management, all posted profits down on prior years, but continued to bolster headcount.