Multi-strategy hedge fund operator Balyasny Asset Management is quietly conducting due diligence on portfolio managers who invest in Bitcoin and other cryptocurrencies, Crypto Investor has learned.
The move to research such strategies was confirmed by three people with knowledge of the matter. A spokesman for Chicago-based Balyasny, which has $10 billion of assets under management, declined to comment.
"It's hard to see BAM paying attention as anything but bullish for Bitcoin and (Ethereum), at least in the short term," one of the sources said, referring to Balyasny by the firm's nickname on Wall Street.
The firm is far from the only Wall Street shop exploring crypto investment plays. Rival Millennium Management, for instance, has been quietly trading Grayscale's $GBTC, as Crypto Investor first reported last month.
Balyasny, notably, has evidently yet to pull the trigger on backing digital-asset plays and has no immediate plans to do so via its commingled hedge funds, Atlas Global and Atlas Enhanced. The firm also is not investing directly in crypto via its teams of portfolio managers.
The firm's portfolio managers run a wide mix of alternative investment strategies on behalf of some of the world’s largest institutional investors — including pension plans and sovereign wealth funds.
Balyasny, however, has tapped managing director Francis "Frank" Frecentese to conduct due diligence on Bitcoin and other forms of cryptocurrency such as Ethereum, two of the sources said. Sources for this story were granted anonymity to discuss sensitive business dealings.
The general idea: get up to speed on how the explosive growth of crypto could affect the firm's myriad more traditional alternative investments. Frecentese joined Balyasny last year from Bessemer Trust, where he also held the title of managing director and focused on conducting due diligence on hedge fund strategies.
Bessemer Trust, founded in 1907, is one of the world's largest and oldest family office investment firms. New York-based Bessemer now runs more than $140 billion on behalf of more than 2,500 family offices, foundations and endowments.
The fact that Balyasny has tapped Frecentese to devote part of his time to crypto due diligence is another bullish indicator for the space, one of the sources said. The source added that the word is founder Dmitry Balyasny has taken a personal interest in how the rise of crypto could affect his namesake firm's existing investments.
Balyasny — a rival of other multi-strategy hedge fund firms including Steve Cohen's Point 72 Asset Management, Ken Griffin's Citadel and Millennium — has pulled off a remarkable turnaround since investment losses and redemptions from limited-partners plummeted firm assets under management to $6 billion.
The firm is in positive performance territory on the year, having gained 2.6% net of limited-partner fees through the end of April.
Frecentese is continuing to seek out crypto hedge fund managers for exploratory conversations in addition to vetting other types of third-party private investments on Balyasny's behalf. That would continue a lengthy due diligence process that has been in the works since at least the beginning of 2021.
Frecentese’s other previous employers? Citi, Goldman Sachs, Lyxor Asset Management and Morgan Stanley.
Multi-strategy hedge fund operator Balyasny Asset Management is quietly conducting due diligence on portfolio managers who invest in Bitcoin and other cryptocurrencies, Crypto Investor has learned. Subscribe for full article
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