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August 08, 2018  

Diagnosis Leads Brody to Shut Sutton Square

Sutton Square Capital has wound down after founder Ken Brody learned he is seriously ill.

Brody, 75, an industry veteran who previously co-founded Taconic Capital, received “very negative medical news” last week, according to Sutton Square portfolio manager Victor Ho. In response, the New York firm quickly liquidated the assets of its U.S.-domiciled Sutton Square Partners Fund and an offshore companion. The long/short equity vehicles had $206 million under management, including $85 million of partner money — most of it Brody’s.

With Brody’s support, Ho already is working on a plan to launch a new fund operation that would employ most of Sutton Square’s staff. On the investment side, Ho worked with analysts Arthuros Mangriotis, Jonathan Pines, Will Simonton and Charlie Brody, Ken Brody’s son. Ken Brody, who oversaw operations, was assisted by Elena Sherman, who held the dual titles of chief operating officer and chief financial officer, and office manager Hillary Griffin. Marketing director Melissa Whitney left in April.

Sutton Square launched in 2016, less than three years after Brody retired from Taconic. The fund, which took a fundamental approach to stock picking, lost money during the last four months of 2016, but gained 21.7% in 2017 and was up 6.2% year-to-date at the end of July.

Ho has begun reaching out to limited partners of Sutton Square about investing in a new fund that would pursue essentially the same strategy. The investors he’s talked to so far have responded positively, Ho said.

In addition, Ho is looking for an anchor investor to replace Brody. “He was the seed investor” for Sutton Square, Ho said. “We are looking for someone to essentially replace him.”

Brody spent 20 years at Goldman Sachs, where he was a partner, before founding Taconic in 1999 with Frank Brosens. Taconic, an event-driven firm still led by Brosens, was managing $8.3 billion, including leverage, at yearend 2017. Brody oversaw operations at Taconic.

Before teaming up with Brody, Ho spent more than eight years at Conatus Capital, and earlier worked at Och-Ziff Capital and private equity shop Castle Harlan. At Sutton Square, he managed a concentrated portfolio of 15-20 long positions and a larger number of relatively small short positions.