Poor Performance Leads Citigroup To Close Pandit Hedge Fund

(NewsVisual, powered by IntellectSpace ) -- Citigroup Inc (NYSE: C) is closing the hedge fund founded by new CEO Vikram Pandit just under a year after its purchase for more than $800 million.

The move may create some negative sentiment for Pandit, who co-founded Old Lane Partners in 2006 and saw a huge profit after Citigroup purchased the hedge fund in 2007. Since its purchase 11 months ago, the fund has experienced few returns and high management turnover, leaving Citigroup to finally decide to cut its losses and shut it down (see article from The Wall Street Journal).

The fate of Old Lane Partners could mean embarrassment for not only Citigroup, which is only the latest in a series of banks to see underperformance after investing in hedge funds, but also for Pandit. As the fund's Co-Founder, Pandit likely had a greater interest in proving the success of Old Lane Partners, especially after its takeover by Citigroup.

Despite Citigroup's an err in judgement with the purchase of Pandit's hedge fund, it's likely that Old Lane's underperformance won't be enough to do too much damage to the CEO's reputation with the company and its shareholders.

An IntellectSpace Knowledge Map of Vikram Pandit’s executive experience illustrates the ties to Morgan Stanley that probably made a big impression on Citigroup’s board, in addition to Pandit’s experience as Head of Citi’s Alternative Investments. Though Pandit may not have the extremely diverse corporate connections as other CEO's, the experience and positions he has held at Morgan Stanley and Citigroup do add value to his perception.

Pandit's past in corporate leadership combined with Citigroup's less-than-successful venture into hedge fund investing should go far an preventing additional investment mistakes.

Click here for an interactive version of this IntellectSpace Knowledge Map.