ROCATON COUGHS UP $2.75M FOR RECOMMENDING

AIN040907
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APRIL 9, 2007
VOL. VIII, NO. 14
Time To Pay The Piper!
ROCATON COUGHS UP $2.75M FOR
RECOMMENDING AMARANTH
Homm Mulls Moscow
Outpost
Florian Homm, co-founder of $2.4
billion hedge fund firm Absolute
Capital Management, is eying Russia
as the next place for expansion.
See story, page 7
Rocaton Investment Advisors has paid a $2.75 million settlement to the San Diego County
Employees Retirement Association for recommending Amaranth Advisors, according to
AIN sister publication Money Management Letter. “We settled all issues between Rocaton
and SDCERA due to the potential for prolonged distraction,” said Todd Miller, Rocaton
spokesman. Amaranth lost $6 billion in natural gas trades in September and Rocaton
(continued on page 14)
At Press Time
Deephaven, JMB File Claims
Against Container Co.
2
U.S. News
SAC Delves Into Tech
Chapman Slams Semiconductor Co.
Owl Creek Joins Delphi Bail-Out
4
6
6
European News
Absolute Eyes Moscow Outpost
Halbis To Soft-Close India Strat
7
7
Private Equity News
Forsythe Adds Mezzanine,
India Exposure
N.Y. Buyout Pursues
Environmental-Waste Co.
8
8
Departments
Data Zone
Mandate Scoreboard
Living On The Hedge
With Logan Short
9
13
15
SPINNERHAWK TO LAUNCH
PRIVATE EQUITY FUND
Dallas hedge fund firm Spinnerhawk Capital
Management is in the early stages of launching a private
equity fund, according to new CIO Jim Wicklund. The
fund, tentatively planned for the third quarter, will coinvest with other private equity groups as opposed to
buying out entire companies on its own, said Wicklund. “[It
(continued on page 14)
GOLDMAN NABS HSBC’s MESSIER, MULLANE
Gerald Messier, global head of HSBC Private Bank’s $30 billion-plus alternatives business,
and David Mullane, head of alternative advisory services, have quit the firm to join
Goldman Sachs.
Messier led HSBC’s single-manager hedge fund selection and bespoke alternative
advisory and also managed funds of funds for HSBC Alternative Investments. Mullane
reported to him, overseeing the private bank’s alternative advisory team. Peter Rigg, head
of alternatives research in New York, will transfer to Geneva on Tuesday to temporarily fill
(continued on page 14)
MARCH MADNESS
Formidable Citadel
GRIFFIN’s FIRM TAKES HEDGE FUND CROWN
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Citadel Investment Group vanquished D.E. Shaw to win the second annual edition of
AIN’s March Madness hedge fund tourney. One year after being upset in the first round
(AIN, 3/7/06), Ken Griffin’s Chicago-based firm was on a mission to reclaim its place in
the annals of hedge fund lore. With apologies to a certain high-ranking politician who
immortalized the phrase: Mission accomplished.
Citadel’s path to the final led through Adage Capital Management, Canyon Capital
Advisors, Renaissance Technologies and finally SAC Capital Advisors. Many of these
(continued on page 11)
Check www.iialternatives.com during the week for breaking news and updates.
AIN040907
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Alternative Investment News
www.iialternatives.com
April 9, 2007
At Press Time
Inflexion To Hire Investment
Director
London- and Manchester-based Inflexion Private Equity is
seeking to hire an investment director to bolster its growing business. The firm is
searching for somebody who either works at a private equity shop or has
experience in leveraged/mezzanine finance or corporate finance. The firm is
focused on U.K. mid-market buyouts and generally makes equity investments of
GBP4-20 million. The new hire will originate investment opportunities, close
deals and monitor the investment portfolio. Managing Partners John Hartz and
Simon Turner were away from the office and unavailable to comment.
Deephaven, JMB File Sea Containers Claims
Deephaven Capital Management and JMB Capital have filed EUR8 million
worth of claims against bankrupt shipping concern Sea Containers. The hedge
funds purchased the claims from a German shipping concern that originally agreed
to sell shares to Bermuda-based Sea Containers. They join other hedge funds
already knee-deep in the action, as Trilogy Capital, Dune Capital and Mariner
Investment Group are members of the official unsecured creditors committee.
Sea Containers agreed to purchase shares of a Finnish limited partnership
controlled by German company Papenburger Fahrschiffreederei GmbH & Co.
in 2005, according to bankruptcy filings. It was due to pay roughly EUR13
million plus interest of 4% with final payment due in Sept. 29, 2006. Two days
before payment was due, Papenburger sold its claim to Silver Point Capital. The
hedge fund renegotiated the agreement with Sea Containers, extending the due
date until Oct. 15 while increasing the interest rate to 10.75%. It also received
an additional $200,000 in cash from Sea Containers in consideration for
renegotiating the deal.
Following the company’s bankruptcy filing, Silver Point sold a portion of the
claims to Deephaven and JMB. Deephaven, the Minnetonka, Minn.-based firm
run by Knight Capital Group, is seeking to recover roughly EUR4 million.
JMB, which is run by Jon Brooks, a former head trader at Cerberus Capital
Management, is also seeking approximately EUR4 million. It could not be
determined if Silver Point still owns the remaining portion of the claim.
Sea Container filed for U.S. bankruptcy protection in October because it was
slated to pay off note holders. Though it had cash on hand to make the
payments, doing so would have caused it to default on other unsecured notes
due in the future, which in turn lead the company to reorganize via Chapter 11
bankruptcy. A Deephaven official declined to comment. Calls to Sea Containers,
JMB and Silver Point were not returned by press time.
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CBOE-Volatility
3/26/07
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AIN040907
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Alternative Investment News
www.iialternatives.com
April 9, 2007
U.S. News
Hamptons Firm To Launch
Mortgage Fund
Sag Harbor, N.Y., based Sag Harbor Capital
Management is launching a hedge fund
geared to institutional investors next month.
W Financial Mortgage Fund II will originate a
portfolio of residential and commercial bridge
loans, second mortgages and on a very
selective basis mezzanine loans, according to
Gregg Winter
Gregg Winter, principal.
Sag Harbor’s existing fund, W Financial Mortgage Fund I, was
launched in July 2003 for high-net-worth individuals. Requests
by institutional investors prompted Winter and co-partner
Mark Bailin to set up the second iteration. “Over time we’ve
been approached by institutional investors and we feel we can
accommodate that,” said Winter. The firm has set a target size of
$250 million for the new fund.
In addition to managing the funds, Winter is the owner and
ceo of Winter & Company, a commercial mortgage brokerage
he founded in 1989.
The original fund has an investment minimum of $100,000
with a two-year lockup, while Fund II’s minimum is $1 million,
probably with no hard lockup, Winter predicted. Fund II will
have a traditional 2/20 fee structure, he noted.
ING To Market Fixed-Income Hedge
Fund, ‘Best Ideas’ Portfolio
ING Investment Management Americas will
start marketing its fixed-income hedge fund
this summer when the fund reaches its oneyear track record. The strategy dips into
mortgage-backed securities, commercial MBS,
asset-backed securities, emerging market debt
and high-yield.
James Kauffman
In addition, ING is promoting Solutions
Portfolios, which takes the best ideas from several strategies to
form multi-asset mandates. The strategy should deliver LIBOR
plus 200 basis points, said Jim Kauffmann, head of fixed
income. Then ING adds a derivative overlay tailored to client
requirements. The portfolios are rebalanced monthly and consist
of equity, bonds and commodities, including senior loans,
emerging market debt, high-yield and absolute return.
ING has provided Solutions Portfolios to retail clients for
years, but won its first institutional mandate nine months ago and
4
now manages $500 million to $1 billion for corporate pension
plans. “We’ll see more focus there because of this reach-for-return
phenomena,” Kauffmann said. “I don’t know if we’ve had an
enquiry for core all year yet.” Solutions Portfolios is overseen by
ING’s Multi-Asset Strategy and Solutions Group. It was formed
last year under Paul Zemsky, who joined ING in 2005 as head of
derivatives strategies.
Kauffmann manages the hedge fund, which can deliver
LIBOR plus 300-600 bps, depending on leverage and market
opportunities. It was seeded with $300 million from clients and
capacity is about $1 billion. The management fee will be 50 bps
with a 2% performance fee on returns over two-month LIBOR.
Citadel To Sell China Security
Convert Notes
Citadel Investment Group is seeking to unload $60 millionworth of China Security & Surveillance Technology convertible
notes, nearly a month after it purchased the securities in a private
deal with the Shenzhen-based security system maker (AIN,
3/12). Citadel plans to sell the notes through one or more
transactions, according to a Securities and Exchange
Commission filing.
The notes pay a 1% coupon and are due in 2012. They have
an initial strike price of $18 per share. The notes also have full
call protection, as China Security may not call them prior to
2012. Calls to Citadel were not returned by press time.
SAC Sinks Teeth Into Tech Company
SAC Capital Advisors has purchased shares and warrants in wireless
networking technology company USA Technologies through a
private placement. Steven Cohen’s firm purchased around 1.6
million shares at $6 for a total of $10 million, according to a filing
with the Securities and Exchange Commission. As part of the deal,
SAC also received warrants to purchase an additional 833,333
shares at $6.40 per share. The warrants are exercisable at any time
following their six month anniversary.
USA Technologies also gave SAC the right to have an observer
attend all board meetings for one year. The hedge fund was also
afforded the right to purchase any future securities issued by the
company to maintain its pro rata ownership position. It currently
owns 15.2% of the company’s shares. Shares of USA
Technologies, which just recently graduated from over-thecounter status to a NASDAQ listing, were trading around $8.41
as AIN went to press last week.
The company, which develops technology to facilitate non-
©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.
Fidelity-Confidence
3/29/07
12:09 PM
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April 9, 2007
U.S. News (cont’d)
cash transaction for items such as vending machines, used a
portion of the proceeds from the sale to repay $1.6 million in
10% convertible senior notes that were due in 2008. Calls to
USA Technologies were not returned by press time. A SAC
spokesman declined to comment.
Owl Creek Joins Delphi Party
Owl Creek Asset Management has joined a group of investors that
will bail Delphi Corp. out of bankruptcy. Owl Creek, which is run
by Jeff Altman, has agreed to purchase up to 2,428,574 shares in a
rights offering of the post-bankrupt company, according to a filing
with the Securities and Exchange Commission.
The automotive parts maker reached an agreement earlier this
year with a group of investors led by Appaloosa Management
and Cerberus Capital Management. That group, which also
included Harbert Management, agreed to purchase $1.4 billion
in common and preferred shares of the newly reorganized
company’s shares. It also agreed to be the backstop of a $2 billion
rights offering, in which shares would be sold for $35 per share.
The plan is still pending approval from the bankruptcy court.
Calls to Owl Creek were not returned by press time.
Chap Slaps FSI Execs
Chapman Capital, the activist hedge fund firm run by wellknown manager Robert Chapman, is upset at executives of semiconductor concern FSI International. Chapman owns 6.5% of
the company’s shares and is planning to solicit interest from
prospective buyers for the company, according to a filing with the
Securities and Exchange Commission. He is also seeking to
replace the firm’s officers and directors.
Chapman is particularly irked by the company’s poor earnings
in light of its executive compensation. CEO Donald Mitchell is
earning “millions of dollars in cash compensation and hundreds
of thousands of free common stock options while owning less
than 30,000 shares of common stock,” the filing says.
Also, despite the company’s location in Chaska, Minn.,
Chapman is upset that Mitchell is based in San Diego. The
filing notes that Benno Sand, executive v.p. of business
development for FSI, defended the living arrangement. “In this
industry, it doesn’t matter where the CEO lives because the
customers are in Asia, Japan, China and Israel; he has
commuted for six years, [and] I don’t view it as a perk,” Sand
said according to the filing. “It’s inane to opine that it does not
matter where the top leader of a public company resides,
particularly where the residence is thousands of miles away from
the core employee base and the company is losing millions of
6
dollars,” Chapman told AIN. “Don Mitchell is putting his sun
tan over his shareholders.”
Chapman also was annoyed that the company refused his offer
to conduct a conference call with Mitchell and Sand. Their
insistence on coordinating and paying for the call was probably
because they wanted to record the conversation, Chapman noted.
“It was a 100% reasonable request. It was not as though I requested
that the ceo put on a clown outfit and dance for me,” he added.
Sand declined to comment on the filing but noted that the
company refused Chapman’s request to coordinate the
conference call because of its internal procedures. He added that
FSI was not planning to record the call.
Calif. Firm Seeks Video
Game Specialist
Beverly Hills, Calif., hedge fund firm Strata Capital
Management is seeking a senior analyst in consumer technology
with an expertise in Internet and video games. According to
President Steven Bardack, the firm’s investments in the market
have paid off due to a recent boom in Asian online gambling.
The new hire will perform strategic analysis, modeling
prospective and existing portfolio companies and analyzing
financial statements. He or she should have at least two years’
experience at a consulting firm or investment bank, or two-seven
years’ experience at a long/short equity hedge fund.
Strata’s growth technology-focused long/short global
strategy has returned 22% the last eight months, according to
Bardack. The firm is holding preliminary discussions about
launching a new 2X levered fund sometime in 2008, he said.
CAIA Opens Registration For
September Exams
The Chartered Alternative Investment Analyst Association has
begun registration for its September cycle of Level I and II exams.
The exams, to run Sept. 10-21, will now solely focus on
alternative asset classes such as real estate, private equity,
commodities, hedge funds and managed futures. Traditionally
the segments covered conventional investments, which are now
considered prerequisite knowledge for all CAIA candidates.
Early registration, which is discounted 10%, ends May 14.
The regular registration ends July 20.
CAIA is an independent, not-for-profit organization whose
goal is to make the CAIA designation the worldwide standard of
excellence in the alternative investments field. Founded in 2002,
it currently has over 4,000 members.
©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.
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April 9, 2007
www.iialternatives.com
Alternative Investment News
European News
Caliburn, Mizuho Target
Japanese Investors
Caliburn Capital Partners, the London- and Geneva-based fund
of funds firm co-founded by Tony Morrongiello, is targeting
Japanese investors for the first time. The firm manages a thematic
fund of hedge funds with around $300 million. Its client base is
largely European, with the exception of Japanese investment
bank Mizuho International, which owns a 29% stake in
Caliburn, said Morrongiello. Mizuho will now market the
Caliburn fund via distribution channels in Japan, he explained.
Morrongiello, who is ex-ceo at Syz & Co.’s alternatives arm,
3A, acknowledged that Japanese investors are notoriously slow to
make investment decisions, with lengthy due diligence processes.
As such, there is no timeframe for securing assets from Japan, but
the firm hopes to eventually grow the fund of funds to $1 billion.
Caliburn is also planning to launch more funds this year
(iialternatives.com, 8/25).
KGR Seeks Analysts
Asia-focused fund of hedge funds firm KGR Capital is seeking to
hire more analysts for its Hong Kong office to strengthen its
manager coverage in the rapidly-expanding Asian hedge fund
space. The firm will add to its fund research and operational due
diligence teams, said Mark White, director in London. KGR will
hire opportunistically and no one has been lined up.
The firm employs 15 people between Hong Kong and
London. The fund research team consists of five analysts in Hong
Kong focused on evaluating hedge funds’ investment processes;
the operational due diligence team numbers three. White said
KGR will seek to grow both teams this year.
increase its research capabilities in the region
(iialternatives.com, 10/27). New funds would initially be run
from Palma and Warsaw, but “it would make sense” to open a
Moscow office at a later date, he said.
Internal discussions are in the early stages and the firm will
probably wait until the €125 million East West fund hits its
€250 million capacity limit. But this is likely to happen by the
end of the year, said the official, who noted that the fund
returned around 26% last year, making it the firm’s highest
performer in 2006.
Halbis Anticipates India Fund
Soft Close
Halbis, an investment management arm of HSBC, expects to
soft-close its new long/short Indian equity
fund within a matter of months. The
fund was rolled out on April 2 with
$101 million, making it Halbis’
largest hedge fund launch to date. It
has a $300 million soft-close target.
“Day-one investors have been those
that can be more nimble,” said
Charles Robinson, marketing director in
London. Some large investors in the firm’s
long-only Indian equity strategy are expected to make their first
allocations to the hedge fund in the next few months, he added.
“We expect to get to the soft close in pretty fast order,” he
ventured. The fund is managed by Sanjiv Duggal, who is based in
Singapore. It will hard-close at $500 million.
Homm Eyes Russia
Weir Group To Shift Up To 25%
Into Alts
Absolute Capital Management, the
$2.4 billion listed hedge fund firm cofounded by well-known manager Florian
Homm, is considering more funds focused on
Central and Eastern Europe and may set up
an office in Moscow. The most likely launch
would be a fund focused on Russia and its
Florian Homm
surrounding states, according to an official at
the Palma de Mallorca, Spain-based firm.
Absolute Capital already manages a fund focused on
Central and Eastern Europe, the East West Fund, but would
benefit from taking advantage of other plays on the region,
said the official. The firm opened a Warsaw office last year to
The approximately £550 million Weir Group Pension & Life
Insurance Scheme is planning to allocate up to a quarter of its
assets to alternatives. The move, which would entail hiring
external managers, follows an investment strategy review
conducted with the help of Watson Wyatt, said Barbara
Mungall, U.K. pensions manager.
The review recommended introducing alternatives to better
spread its risk, Mungall explained. The scheme plans to diversify
its portfolio gradually over the next three to four years and its
trustees will study property, private equity and possibly hedge
funds and commodities as well as other asset classes
recommended by the consultant. The move will be funded by
reducing equity but the exact plan has not yet been decided.
To receive email alerts or online access, call 800-715-9195.
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April 9, 2007
Private Equity News
Chicago Federation Eyes P/E Increase
The $580 million Jewish Federation of
Metropolitan Chicago will discuss whether to
raise its target private equity allocation at its
June 4 finance committee meeting. When
CIO David Brief joined the federation in
2002 it had less than 3% of its assets in
private equity. It now has a 9% stake and is on
David Brief
track to hit 12% in 2010, the maximum
exposure allowed in its investment policy. Brief said he is
studying whether the fund should cap private equity at 12% or
adjust its policy to allow a higher exposure.
Brief likes private equity’s potential to outperform traditional
equity and bond markets. “If we want to generate the types of
returns that drive our economic engine then private equity
becomes very alluring, but it’s fraught with difficulties,” he said.
But Brief is concerned about the lack of reliable performance
data, seeing as private equity managers tend to raise capital for a
new fund before they have meaningful numbers back from their
prior fund. “You’re buying into a blind pool without being able
to judge a manager’s recent performance,” he said.
The federation takes a core/satellite approach to private equity.
Its core funds of funds include Commonfund, Keyhaven Capital
Partners in London and Weathergage Capital, a fairly new
venture fund of funds. Credit Suisse advises the federation on
direct private equity investments.
FSI Taps Analyst
Financial Stocks Inc., an investment firm focused on the securities industry, has hired Kevin Reeney as an analyst in its private
equity division. Reeney, who is based in the firm’s Cincinnati
office, joined from investment banking and wealth management
shop Ryan Beck & Co.
Bob King, senior managing director at FSI, said Reeney’s
experience—particularly his “extensive knowledge of the U.S.
banking sector”—would strengthen the firm’s ability to
uncover financial institutions with the potential to deliver
outsized returns.
Reeney’s career started at Merrill Lynch’s investment
© 2007 Knight Capital Group, Inc. All rights reserved.
banking division in the early 1990s. He also did stints at
Advest and Sterling Financial Investment Group before
moving to Ryan Beck.
N.Y. Buyout Targets E-Waste Co.
Hyde Park Holdings, a private equity firm based in New York,
recently bought e-waste company Environmental Reclamation
Services. Bankers at Citigroup Capital Strategies, which ran the
auction, are hoping to line up similar targets for the firm, said
Eric Williams, a managing director at Citigroup who represented
ERS. Terms of the recent transaction were not disclosed.
Laurence Levy, Hyde Park’s founder, did not return phone calls.
Forsyth P/E Fund Adds Mezz Debt,
India Exposure
Forsyth Partners, the Croydon, Surrey-based fund of funds
firm, has revealed some of the holdings of its private equity
fund of funds. In February, the fund upped its exposure to
Duemme Private Equity Strategies and committed capital to a
private equity fund of funds focused on India. Henry Freeman,
fund manager, was out of the office and could not be reached.
The Forsyth fund increased its position in Duemme because
manager Andrea Torlonia “tends to have more exposure to
mezzanine debt than his peers,” according to an investor
document. “The reason for this is to further reduce correlation to
equity markets, which served us well when market turbulence set
in on 27 February.”
Also in February, the Forsyth fund took a position in
Evolvence India Holdings, which listed on the Alternative
Investment Market in March. “India has already shown strong
growth and we believe this will continue for the longer term,” the
document states. “The fund is tilted towards the fast-growing
areas of infrastructure, construction, retail and life sciences, and is
managed locally by the Evolvence team in India.”
Forsyth’s fund launched Dec. 1 and invests in a concentrated
portfolio of listed private equity companies and private equityrelated securities. It returned 1.56% in February and is up 4.4%
since inception.
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April 9, 2007
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Alternative Investment News
Data Zone
PERFORMANCE SNAPSHOT: FUNDS OF HEDGE FUNDS
The table below displays some of last month’s top performing funds of hedge funds, according to data
provided by Eurekahedge.
Fund
Pinnacle Fund
The Kintaro Fund
SAM Discovery Fund
Thames River Warrior Fund
Multi Strategy Fund (Equity Market Neutral)
Gottex Horizon Fund Limited - USD
Galileo Japan Fund
HDF Europe Long Short
Green Way Select European L/S - Class A
La Fayette Regular Growth Fund - USD
Pine Grove Partners
Summit Private Investments I
Conservative Alternative Strategies - Series A
Coast Diversified Fund
Crestline Plus
Archstone Market Neutral Strategies Fund
Benchmark Plus Fixed Income Fund
Manager
Pinnacle Associates
SwissEdge
Atlas Capital
Thames River Capital
WR Capital Management
Gottex Fund Management
GL Funds
HDF Finance
Credit Agricole Asset Management
La Fayette Investment Management (UK)
Pine Grove Associates
Summit Private Investments
Lyster Watson & Company
Coast Asset Management
Crestline Investors
Archstone Partners
Paradigm Partners
Region
Global
Asia Pacific
Emerging Markets
Global
Global
Global
Asia Pacific
Europe
Europe
Europe
North America
North America
North America
North America
North America
North America
North America
Feb ‘07
Return
5.09
3.24
4.21
2.96
3.05
2.32
3.42
2.25
2.20
1.57
2.00
1.84
1.64
2.03
2.53
0.89
4.03
‘07 YTD
return
8.32
5.70
5.45
5.42
5.33
4.88
4.83
3.76
3.72
3.71
3.63
3.33
3.31
3.27
3.26
3.20
3.16
2006
return
10.75
(16.51)
20.53
15.67
0.97
7.51
(12.83)
12.65
16.79
10.98
9.67
12.42
10.30
8.58
15.53
13.20
7.10
Annualised
Std Deviation
6.82
19.83
11.47
6.72
4.75
4.76
9.86
4.70
6.05
4.37
3.03
6.52
3.13
6.55
6.29
3.09
9.61
Sharpe
Ratio
0.78
0.64
0.05
0.63
2.51
2.42
0.38
1.07
0.75
1.31
2.26
1.41
1.31
1.76
2.07
1.35
1.27
AuM
(US$ Mln)
63
80
91
554
55
47
76
93
245
1380
604
341
234
1525
260
190
357
Eurekahedge Commentary: Funds of Hedge Funds
The Eurekahedge Fund of Funds Index posted modest gains of 0.7% in February, despite market turbulence towards the month’s close. The month’s best returns came from allocations to
opportunistic hedge fund strategies such as event driven and distressed debt. While the former took advantage of the continued strength in global M&A deal flow (including several cross-border
mergers, notably in India and Canada) and new issuance (7 public offerings were successfully placed in Latin America alone, during the month), the latter benefited from a high yield market that
posted returns upwards of 1% for the eighth consecutive month. Though corporate bonds had been steadily appreciating, the sharp month-end equity correction spurred selling pressure in the
corporate debt market. Credit spreads widened and equity market volatility spiked. The Sharp reversals across financial markets, however, had an adverse effect on allocations to directional
macro and CTA/managed futures strategies.
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AIN040907
4/5/07
1:51 PM
Page 11
April 9, 2007
www.iialternatives.com
Alternative Investment News
MARCH MADNESS
GRIFFIN’S FIRM
SAC Wins ‘Consolation Game’ For 3rd Place
As the lone “Cinderella” team in the final four, Brevan Howard
had its work cut out for it. A loss to Shaw in the semifinal left it
bruised and battered, but desperate to prove it
belonged. By listing one of its funds on the
London Stock Exchange Brevan Howard
certainly caught the industry’s attention this
year. Unfortunately, the listing failed to meet
its €1 billion target. SAC Capital Advisors,
by contrast, had probably the quietest year of
the four semifinalists, if 34% returns can be
considered quiet. This better than tripled
Brevan Howard’s 11% return last year and Steven
Cohen’s firm rode off with the bronze.
(continued from page 1)
battles were extremely close-fought, but Griffin’s firm
ultimately triumphed on the back of a few
factors: Performance (returns close to 30% in
its Kensington Global Strategies fund and close
to 34% in its Wellington Partners strategy),
innovation (the first-ever public debt offering
by a hedge fund in the U.S.) and willingness
to undertake contrarian missions, such as
purchasing Amaranth Advisors’ energy book.
Together, these made Citadel’s case too
compelling to match, let alone surpass—even by
the likes of David Shaw’s $26 billion firm.
GLG Partners
1
Euro
Region
Sloane
Robinson
Conn.
Region
Pequot Capital
Management
SAC Capital
Advisors
8
4
4
SAC Capital
Advisors
Sloane
Robinson
Brevan
Howard Asset
Management
4
Brevan
Howard Asset
Management
2
4
SAC Capital
Advisors
ESL
Investments
Brevan
Howard Asset
Management
CHAMPION
6
BlueCrest
Capital
Management
Citadel
Investment
Group
6
D.E. Shaw
Group
2
ESL
Investments
2
AQR Capital
Management
6
Citadel
Investment
Group
Farallon
Capital
Management
D.E. Shaw
Group
1
1
THIRD PLACE GAME:
D.E. Shaw
Group
Cerberus
Capital
Management
Brevan
Howard Asset
Management
5
5
SAC
Capital
Advisors
Renaissance
Technologies
5
SAC Capital
Advisors
Renaissance
Technologies
Citadel
Investment
Group
D.E. Shaw
Group
5
Citadel
Investment
Group
Atticus Capital
7
Atticus Capital
Moore Capital
Management
6
6
NYC
Region
Other
Ports
Region
To receive email alerts or online access, call 800-715-9195.
Citadel
Investment
Group
2
2
Canyon Capital
Advisors
6
11
RS HedgeFunds
3/20/07
11:13 AM
Page 1
AIN040907
4/5/07
1:51 PM
Page 13
April 9, 2007
www.iialternatives.com
Alternative Investment News
MANDATE SCOREBOARD
The table below shows new allocation commitments gained by alternative managers year-to-date through April 4.
2007 Tally
Firms Hired
Week of April 2
Wins
Total*
1
2
3
Hellman & Friedman
Apax Partners
Gottex Asset Management
6
5
5
1035
670
508
4
5
6
7
8
9
10
11
12
Crestline Investors
CVC European Equity Partners
Silver Lake Partners
Avenue Special Situations
OCM Opportunity Fund
Pacific Corporate Group
Coller International Partners
Lehman Brothers
Aquiline Holdings
Kohlberg Kravis Roberts & Co.
New Mountain Capital
Grove Street Advisors
Carlyle Group
MHR Institutional Partners
Energy Capital Partners
AQR Capital Management
AXA Rosenberg
Texas Pacific Group
Goldman Sachs Asset Management
Man Group
Grosvenor Capital Management
Greenpark Capital
Leonard Green & Partners
The Blackstone Group
GMO Australia
Oaktree Capital Management
Credit Suisse
Abbott Capital Management
Affinity Equity Partners
Enterprise Investors
Actera Partners
Lexington Partners
Morgan Stanley Investment Mgt
Pantheon Ventures
Hammond Associates
Four Winds Capital Management
Benchmark Plus Management
Blue Point Capital Partners
Citigroup Asset Management
Gores Group
Investcorp
Navis Partners
NGP Energy Capital Management
Satellite Asset Management
Sheridan Production Partners
TCW Group
Charterhouse Capital Partners
Portfolio Advisors
Aetos Capital
K2 Advisors
Alchemy Partners
UBS Global Asset Management
Sankaty Advisors
Attalus Capital
Signet Capital Managemetn
Canyon Capital Advisors
Intrepid Capital Management
The Jordan Company
Providence Equity Partners
Horizon21
1
1
4
2
3
1
1
5
2
2
2
1
3
1
1
1
1
3
1
2
2
3
3
5
2
2
3
1
1
1
3
1
4
4
1
1
3
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
3
1
1
1
1
1
3
1
500
486
450
450
410
400
375
300
300
300
300
300
250
250
220
213
212
200
200
197
190
177
175
174
158
155
150
150
150
131
130
130
128
122
117
115
100
100
100
100
100
100
100
100
100
100
97
95
90
90
89
87
80
80
79
75
75
75
70
70
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
49
50
51
53
54
55
56
57
58
61
62
Client
Asset Type
Amount*
Bath & North East Somerset Council Avon Pension Fund
United Biscuits (UK) Pension Plan
Hedge Funds of Funds
Hedge Funds
118
N/A
Mass. Pension Reserves Investment Management Board
Private Equity (U.S.)
125
Bath & North East Somerset Council Avon Pension Fund
Hedge Funds of Funds
197
Mass. Pension Reserves Investment Management Board
Private Equity (U.S.)
125
Mass. Pension Reserves Investment Management Board
Private Equity (U.S.)
100
Bath & North East Somerset Council Avon Pension Fund
Hedge Funds of Funds
79
*in USD millions
For further information, including identities of the institutions and RFP contacts, please visit iisearches.com or contact Keith Arends at 212-224-3533 or [email protected].
To receive email alerts or online access, call 800-715-9195.
13
AIN040907
4/5/07
1:51 PM
Page 14
Alternative Investment News
www.iialternatives.com
GOLDMAN NABS
April 9, 2007
hedge fund firm run by Texas oilman and famed corporate
raider T. Boone Pickens (AIN, 6/12/05).
Wicklund has dabbled in oil for the past three decades,
figuratively and literally; he was out in the fields drilling oil in
the late 70s and early 80s. “That broad experience always gave
me a little bit of an advantage as an analyst,” he said. “I hope
and trust it will benefit me to some extent as an investor.”
Asked why he departed BofA, Wicklund said he was tired of
the constant travel the job required. “My oldest daughter starts
the first grade [this fall]. I made myself a promise that when
she started, I would stop traveling,” he said.
Wicklund was ranked third in AIN’s sister publication
Institutional Investor’s All-America Research Team in October.
—Suzy Kenly
(continued from page 1)
Messier’s role while a permanent replacement is found,
according to a spokesman for HSBC. No one has been lined
up for the position vacated by Mullane.
Messier and Mullane will join Goldman’s hedge fund
strategies group, which manages about $19 billion. Messier
and a Goldman spokesman both declined to comment.
Mullane could not be contacted on his mobile phone.
—Robert Murray
SPINNERHAWK TO
(continued from page 1)
would be] more of a junior investor in some deals rather than
blaze new trails,” he said.
The firm is planning the fund in response to investor
interest. Wicklund joined the firm March 1 after a six-year
stint at Bank of America, where he was managing director in
the equity research department, covering oilfield services,
equipment and drillers. He currently co-manages the firm’s
long/short equity Spinnerhawk Natural Resources Fund with
Founder Garrett Smith. Smith started the firm nearly two years
ago after departing Dallas-based BP Capital, the $2.5 billion
ROCATION COUGHS
(continued from page 1)
resigned from SDCERA shortly after, on Oct. 17.
Miller declined to comment on whether the $2.75 million
was covered by professional liability insurance or came out of
partners’ pockets, or to reveal whether Rocaton admitted
wrongdoing. “It’s a lot of money no matter how you slice it
and it’s a lot of money to be paid so quickly,” said David
Scott, an attorney at Scott + Scott, a law firm that represents
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NAME
TITLE
JANUARY 2004
VOL. V, NO. 1
FIRM
GATE SLAMS ON
MILLENNIUM INVESTORS
FrontPoint Shuts Down
Quant Fund
FrontPoint Partners has
for the first
time liquidated one of its
funds. The
Greenwich, Conn.-based
hedge fund
juggernaut has shut
down the
Quantitative Equity Strategies
(QES) fund.
See story, page 19
ADDRESS
Some investors looking to
get out of an offshore fund
last quarter run by multi-billion
dollar hedge fund firm
Millennium International
Management found they
were stuck. That’s because
following a guilty plea by
a
former senior trader at the
Millennium International
Fund, the fund’s redemption
limits were reached,
(continued on page 25)
At Press Time
Ex-Ranger Manager Readies
Fund
LONGHORNS TO PLOW
INTO ALTS
2
U.S. Searches
CITY/STATE
POSTAL CODE/ZIP
Ispat Inland Considers Mezz.
Search 10
Albuquerque School Weighs
Funds 12
COUNTRY
European Searches
French Insurer Seeks Hedge
Funds
Health Charity Makes Foray
16
16
Bob Boldt
U.S. Manager News
Former Caxton Bond Trader
Returns 19
Amaranth Unveils Changes
20
TEL
FAX
E-MAIL
European Manager News
Quadriga Readies Fund
22
News From Other Ports
Telstra To Tap Managers
25
Departments
Market Focus
Search & Hire Directory
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18
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The University of Texas System’s
$11.5 billion endowment
funds are
seeking to add roughly $575
million in new hedge fund
investments this
year. The funds, which are
managed by the University
of Texas
Investment Management
Company (UTIMCO), currently
have a little
over 20% of their assets allocated
to hedge funds, and the goal
a 25% allocation, said Bob
is to have
Boldt, cio. The school is leaning
towards
investing in absolute return
funds over other hedge fund
styles, Boldt
(continued on page 4)
FARALLON FOLLOWS LONE
PINE’S LEAD
ON HIGH-WATER MARKS
Farallon Capital Managemen
t, the San Francisco-based
hedge fund behemoth run
Steyer, is the latest hedge
by Tom
fund manager to propose
changes to its high-water
provisions. As first reported
mark
on AIN’s Web site, www.iialtern
atives.com, the move would
the firm in line with a growing
put
number of funds adopting
changes first proposed last
by Tiger cub Lone Pine Capital
spring
that allow hedge fund managers
even when their funds are
to earn performance fees
under water. Farallon wants
the ability to earn a reduced
(continued on page 26)
KLM TO WEIGH FUNDS
Check www.iialternatives.
com during the week for
CREDIT CARD NUMBER
EXPIRATION DATE
OF FUNDS
The €8 billion KLM Pensioenfon
ds, the Amstelveen-based
pension plan for pilots, crew
members and ground staff
of
KLM Royal Dutch Airlines,
may make its first foray into
hedge funds of funds this
year. Fons Lute, cio of Blue
Sky
Group, the money managemen
t subsidiary of KLM
Pensionenfonds, said he plans
to recommend a 2-5% allocation
hedge funds of funds at a
to
board meeting in April.
(continued on page 26)
breaking news and updates.
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AIN040907
4/5/07
1:51 PM
Page 15
April 9, 2007
www.iialternatives.com
institutions in securities fraud cases. SDCERA paid Rocaton
$1.2 million in fees from 2002 through June 2005.
Separately, SDCERA hired Bernstein Litowitz Berger &
Grossman in October to advise on legal action following
Amaranth’s collapse. It could not be learned whether BLB&G
advised SDCERA on its settlement with Rocaton. The plan
filed a lawsuit March 29 against Amaranth to recoup losses
from its $175 million mandate. Amaranth’s collapse caused
SDCERA to lose about $105 million of its original
investment, after initial gains of nearly $59 million. It has
already received two payouts from Amaranth; $12.5 million in
November and $35.5 million in December. BLB&G lead
attorney John “Sean” Coffey was on vacation at press time and
Brian White, ceo at SDCERA, did not return a call.
SDCERA appears to have suffered the greatest loss from
Amaranth of any pension fund. 3M’s $9.2 billion pension
fund was also an Amaranth client but its mandate was worth
less than 1% of plan assets. Canada’s Caisse de Depot et
Placement du Quebec reportedly invested $67 million with
Amaranth. The $32 billion Pennsylvania State Employees
Retirement System is also advised by Rocaton and used
Amaranth, but the fund has no qualms with its consultant
because it only had a marginal exposure through fund of
funds, said Robert Gentzel, spokesman. Meanwhile, the New
Jersey Division of Investments had a $25 million exposure to
Amaranth through funds of hedge funds managed by
Goldman Sachs Asset Management, Arden Asset
For More Benefits
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Alternative Investment News
Management and Rock Creek Group. The Philadelphia
Public Employees Retirement System had $8 million with
Amaranth via four funds of funds.
—Emma Blackwell
Living On The Hedge…
An occasional column by Logan Short,
an astute industry observer. He can be
reached at [email protected].
I know AIN’s March Madness has been getting a
lot of attention, with that Baker guy going on TV to
talk about it and everything, but I’ve got a few issues I’d
like to raise. For one, didn’t the criteria state that “favorable or negative
press” would factor in to who got picked to win? Then why did Citadel
Investment Group win the whole thing? (See page 1). When and where
did these guys ever receive favorable press—about anything? Not in AIN,
that’s for sure. The only stuff I could dig out of the archives were reports of
under-performance, redemptions and layoffs…Come to think of it, how
much favorable press has there been of hedge funds, period? Except for a
flacky piece on Jim Simons in the Wall Street Journal a year or two ago,
I can’t think of anything. But Simons’ firm, Renaissance Technologies,
lost in the quarterfinals! To Citadel! I’m starting to think these guys just
flipped a coin to determine winners. Unfortunately, you haven’t heard the
last of editorial staff playing judge, jury and (for all I know) executioner to
the industry. In a few weeks, these clowns announce nominees for their
5th Annual Hedge Fund Industry Awards. I think I’m going to take the
occasion to pitch a set of anti-awards awards nominations. The first
nominee: Amaranth Advisors, who it turns out was a real nominee back
in 2004. You just can’t make this stuff up.
Quote Of The Week
“It was not as though I requested that the ceo put on a clown outfit
and dance for me.”—Chapman Capital’s Robert Chapman,
expressing his annoyance at FSI International’s refusal to conduct a
conference call (see story, page 6).
One Year Ago In Alternative Investment News
Credit Suisse shook up its hedge fund of funds group by
replacing its top executives in New York. [Jim Vos, who headed
the group, was initially reassigned but later resigned to start up
his own hedge fund and private equity advisory, Aksia (AIN,
8/7). He hired four former Credit Suisse employees, Norman
Calargian, Credit Suisse Asset Management director of equity
arbitrage strategies, Simon Fludgate, director of operational due
diligence (AIN, 9/4), Joe Larucci, head of long/short equity
manager selection and Patrick Adelsbach, head of event-driven
and credit manager selection (iialternatives.com, 8/3).]
To receive email alerts or online access, call 800-715-9195.
15
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2/23/06
10:24 AM
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