Get Ready for the Eton Park Cubs

As the saying goes, when one door closes, another one opens — or several, in the case of the hedge fund industry.

High-profile hedge fund closures are often followed by a host of launches of firms formed by the top portfolio managers who worked at the shuttered firms. Eric Mindich’s announcement last week that he is closing his multistrategy hedge fund firm,Eton Park Capital Management, and returning investors’ capital after ten years in business is already providing fodder for speculation about which of the firm’s portfolio managers and analysts are prepping their own funds.

A multistrategy firm formed in the model of Goldman Sachs’ proprietary arbitrage desk, Eton Park has plenty of talented portfolio managers who will now be on the market. As recently as 2015 Eton Park, whichlost 9.4 percentlast year, had $9 billion in assets.

Among the Eton Park partners whom former colleagues and associates say will be in demand are Allan Merrill, head of merger event driven; Aaron Wertentheil, head of structured credit and derivatives; and Bruce Haggerty, head of long-short and event investing. These portfolio managers could choose to launch their own firms or join established money managers; in recent years launching a hedge fund has become less of a default option, with funding harder to come by.

One source with knowledge of what is happening inside Eton Park says Mindich could seed one or more spinouts. This person says Merrill is the strongest candidate for starting his own fund, possibly with backing from his former boss.

Regardless of whether Mindich decides to invest with any of his current portfolio managers, seeding a new generation of talent is not an unusual option for hedge fund managers who shut down their firms and, often, turn them into family offices. The most famous of these is Julian Robertson Jr.’s Tiger Management, which ostensibly morphed into a hedge fund seeding business. Others, such as Stanley Druckenmiller — George Soros’ former deputy, who shuttered his very successful hedge fund in 2010 — have been quietly investing in startup funds over the past few years. Richard Perry, Mindich’s former boss at Goldman Sachs, who announced the closure of his firm, Perry Capital, earlier this year, is expected to invest with at least one of his former portfolio managers: Todd Westhus, who is reportedlyin the processof launching his own firm.

Among the Eton Park cubs already in existence, formed by people who have left the firm over its ten-year life, isGovernors Lane. That New York–based event-driven fund was formed by former Eton Park partner Isaac Corré in 2015.

Those wishing to invest in any new Eton Park spinouts will have to wait some time as the fund winds down. A source with knowledge of the situation says the first round of layoffs is expected next month, with another in June, and the fund expects to be more or less done by the end of 2018. A spokesperson for Eton Park declined to comment.