Two Sigma Unit Gets Up to $500 Million From Massachusetts Fund

(Bloomberg) -- Sightway Capital, which is owned by hedge fund Two Sigma, is getting a big check from a state pension fund.

The Massachusetts Pension Reserves Investment Trust approved investing as much as $500 million in Sightway, a company which was created out of Two Sigma’s private investment arm in 2017 and targets emerging companies in transportation, real estate and other industries. Sightway’s investors include Two Sigma co-founders John Overdeck and David Siegel, according to documents from the pension board’s meeting on Tuesday.

The state pension aims to reap more from private equity as it slightly raised its allocation to the asset class. Last year it was the pension’s best performer, returning 24.5 percent.

The investment was among about $1.7 billion of new and additional commitments spread across a dozen money managers that the board authorized today. It also terminated a $250 million investment in a Huber Capital Management small cap value fund while investing $300 million in three new micro cap managers.

Other new authorizations included as much as $125 million in a distressed Italian loan fund run by Investcorp Investment Advisers; as much as $100 million in an aviation fund managed by BlackRock Inc.; and as much as $30 million in two funds controlled by venture investor Spark Capital.

The Massachusetts board oversees retirement money for state employees and teachers and had about $69.3 billion under management at year end, it said in a report at the meeting. The fund lost 6.1 percent in the fourth quarter, driven by a stock market swoon, while for the year it fell 1.8 percent, gross of fees, it said.

A Two Sigma representative declined to comment.

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