With Commodities Corp. Acquisition, Goldman Sachs Asset Management Ups its Alternatives Game
In 1997, Goldman Sachs Asset Management (GSAM) acquires Commodities Corp., a pioneer of alternative investing founded in 1969 by Helmut Weymar with backing from investor Amos Hostetter and Nobel-prize-winning economist Paul Samuelson. The acquisition provides GSAM with an additional US$2 billion in assets under management and an established fund-of-hedge-funds platform.
In 1969, economist Helmut Weymar founded Commodities Corporation (Commodities Corp. or “CC”) as a limited partnership trading commodity contracts on domestic futures markets. The firm was backed by noted investor Amos Hostetter, MIT professor and Nobel-prize-winning economist Paul Samuelson and several of their associates. Weymar had completed his PhD on the history of cocoa prices at MIT with Samuelson among his dissertation advisors and subsequently spent four years trading commodities for Nabisco.
Commodities Corp. was a trailblazer in the alternative investment space and by 1994 had grown into a US$1.5 billion firm trading commodities listed on 60 exchanges around the world. CC’s model was to hire individual traders, provide them with capital and risk management, and place them under the supervision of senior traders to execute their strategies — an approach that would evolve into a fund-of-funds platform.
In the mid-1990s, Goldman Sachs’ own investment management arm, Goldman Sachs Asset Management (GSAM), was expanding: in 1997 alone, GSAM grew assets under management organically by US$33 billion (US$51 billion in 2019 dollars). But the firm had greater ambitions, including expanding the range of investment solutions it offered its clients within both traditional and alternative asset classes. The year 1997 marked two significant acquisitions for the firm, one of which was Commodities Corp. The other was Tampa, Florida-based fundamental growth equity manager Liberty Asset Management, which added US$7 billion (US$11 billion in 2019 dollars) to GSAM’s assets under management, bringing total AUM to US$110 billion (US$172 billion in 2019 dollars).
At the time of the acquisition, Commodities Corp. managed US$1.8 billion (US$2.8 billion in 2019 dollars) in assets and was headquartered in Princeton, New Jersey, with offices in Geneva, Tokyo, Singapore and New York. With the addition of the CC business, Goldman Sachs significantly broadened the range of alternative strategies it could offer GSAM clients. Commodities Corp. was renamed Goldman Sachs Hedge Fund Strategies in 2004 and eventually was folded into the Investment Management Division’s Alternative Investments & Manager Selection (AIMS) group. The AIMS group currently manages over US$250 billion in open-architecture solutions for institutions and individuals across all asset classes, building portfolios, providing liquidity, and partnering with asset managers outside of GSAM to access a wide range of investment opportunities.
The 1997 Commodities Corp. acquisition exemplifies Goldman Sachs’ commitment to ensuring that clients of the firm have access to high-quality, innovative investment solutions, whether designed “in-house” or via partnership with or acquisition of another top-tier organization.
This article was originally published as part of a series commemorating the 150th anniversary of Goldman Sachs' founding in 1869.