Key Takeaways
- • E. Lee Hennessee, pioneering hedge fund executive and index creator, died October 29, 2016, at age 64 from an apparent stroke at her home in West Palm Beach, Florida.
- • Founded the Hennessee Hedge Fund Index in 1987—one of the first systematic tracking mechanisms for hedge fund strategies and returns during the industry's early growth phase when transparency was extremely limited.
- • Established the Hennessee Hedge Fund Advisory Group in 1987 while at E.F. Hutton; the firm grew to peak assets of $1.6 billion under her management with husband Charles J. Gradante.
- • Reputation significantly damaged in 2005 when Bayou Management, a fund recommended by her advisory group, collapsed due to fraud; approximately 40 clients lost $56 million following her firm's recommendation, with Bayou's founder Samuel Israel III pleading guilty to conspiracy and fraud involving $450 million in investor losses.
- • Served as early supporter of 100 Women in Hedge Funds industry association and maintained prominent presence at hedge fund conferences throughout her career.
Summary
E. Lee Hennessee, born September 1, 1952, in Raleigh, North Carolina, emerged as one of the earliest female executives in the historically male-dominated hedge fund industry. She was discovered dead at her Trump Plaza residence in West Palm Beach on October 29, 2016, at age 64. The cause was an apparent stroke, according to a statement from the family's spokesman Chase Scott. Her husband and business partner, Charles J. Gradante, whom she married in 1992, found her at the residence.
Hennessee's most significant professional achievement was creating the Hennessee Hedge Fund Index in 1987—one of the first systematic mechanisms designed to track hedge fund strategies and performance across the then-secretive industry. That same year, while employed at E.F. Hutton, she founded the Hennessee Hedge Fund Advisory Group as a division of the firm. The advisory operation conducted research and guided institutional clients toward hedge fund investments during a period of rapid industry expansion when disclosure standards and strategic transparency were substantially lower than contemporary levels. Following E.F. Hutton's 1988 acquisition by Shearson Lehman Brothers, the advisory group continued operations. The firm subsequently relocated to Republic New York Securities and then Weiss, Peck & Greer before becoming an independent operation, the Hennessee Group, in 1997. At its peak, the Hennessee Group managed in excess of $1.6 billion in assets.
A major professional setback occurred in 2005 when Bayou Management, a Connecticut-based hedge fund that the Hennessee Group had recommended to clients, collapsed following discovery of a fraudulent scheme. Bayou founder and chief executive Samuel Israel III pleaded guilty to conspiracy and fraud charges for cheating investors out of $450 million. Approximately 40 of Hennessee's clients suffered losses totaling $56 million after investing in Bayou funds on her group's recommendation, according to Securities and Exchange Commission filings. This incident substantially damaged her industry reputation after decades of building credibility as a hedge fund research authority.
Throughout her career, Hennessee remained a visible participant in industry forums and conferences. She was recognized as an early advocate for the 100 Women in Hedge Funds industry association, contributing to efforts to increase female representation in the asset management sector.
Hennessee's most significant professional achievement was creating the Hennessee Hedge Fund Index in 1987—one of the first systematic mechanisms designed to track hedge fund strategies and performance across the then-secretive industry. That same year, while employed at E.F. Hutton, she founded the Hennessee Hedge Fund Advisory Group as a division of the firm. The advisory operation conducted research and guided institutional clients toward hedge fund investments during a period of rapid industry expansion when disclosure standards and strategic transparency were substantially lower than contemporary levels. Following E.F. Hutton's 1988 acquisition by Shearson Lehman Brothers, the advisory group continued operations. The firm subsequently relocated to Republic New York Securities and then Weiss, Peck & Greer before becoming an independent operation, the Hennessee Group, in 1997. At its peak, the Hennessee Group managed in excess of $1.6 billion in assets.
A major professional setback occurred in 2005 when Bayou Management, a Connecticut-based hedge fund that the Hennessee Group had recommended to clients, collapsed following discovery of a fraudulent scheme. Bayou founder and chief executive Samuel Israel III pleaded guilty to conspiracy and fraud charges for cheating investors out of $450 million. Approximately 40 of Hennessee's clients suffered losses totaling $56 million after investing in Bayou funds on her group's recommendation, according to Securities and Exchange Commission filings. This incident substantially damaged her industry reputation after decades of building credibility as a hedge fund research authority.
Throughout her career, Hennessee remained a visible participant in industry forums and conferences. She was recognized as an early advocate for the 100 Women in Hedge Funds industry association, contributing to efforts to increase female representation in the asset management sector.
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