07/11/2012

Lampert’s ESL Loses Staff in Florida Move

Eddie Lampert may have moved his ESL Investments to Miami, but virtually all of his staff remains in Greenwich, Conn., where they now work for former ESL chief financial officer Adrian Maizey.

Coinciding with the move south on June 1, ESL went through a restructuring under which the entire operations side of the business and a good deal of the investment-research department were outsourced to two startup service providers led by Maizey. ESL now has just two employees, one of whom is Lampert. The rest — about 20 staffers — were hired by Maizey’s firms: Rand Capital and Rand Group, both of Greenwich.

Why the reorganization? It turns out that when Lampert decided to relocate his $6.7 billion fund operation, most of his staff didn’t want to leave Connecticut. Among them was Maizey, who proposed spinning off the bulk of ESL’s operations as independent firms that would then hire most of the staff. ESL now outsources its back-office and middle-office functions to Rand Group, while affiliate Rand Capital feeds research and investment ideas to Lampert in Florida. As portfolio manager, Lampert has ultimate control over all investment decisions.

Maizey plans to market Rand Group’s services — including trade confirmation and settlement, accounting and compliance functions — to other hedge fund managers, private equity firms and family offices. Rand Capital will cater exclusively to ESL, though Maizey may launch a separate entity that would offer research to other portfolio managers.

Although Ayn Rand is a favorite author of Lampert, Maizey named his businesses for a region in his native South Africa that accounts for some 40% of the world’s gold supply. South Africa’s currency, the rand, also derives its name from the region, Witwatersrand.

Maizey joined ESL in 2006 from MotherRock, a once-prominent energy-trading hedge fund that shut down that year. He previously worked at Deloitte, where he consulted on trading and risk management, mergers and acquisitions and regulatory investigations for various investment businesses.

One key ESL employee who moved on when the firm relocated to Miami was president William Crowley. However, he continues to serve on the board of several companies in which ESL holds significant stakes, including AutoZone and AutoNation.

Lampert founded ESL in 1988. Most of the firm’s investments — including a controlling stake in Sears — are managed via the ESL Partners fund. The firm also runs a vehicle for the Ziff family, dubbed ESL Investors, that invests alongside the flagship fund. ESL Investors, which had $782 million of gross assets earlier this year, is now being wound down — presumably because Sears hasn’t performed well. In January, Lampert agreed to personally buy $130 million of Sears stock from the Ziff family.

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