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glg thumped in first quarter tuckerbrook`s yoder launches fund amid
AIN051208 8/5/08 20:11 Page 1 MAY 12, 2008 VOL. IX, NO. 19 TUCKERBROOK’S YODER LAUNCHES FUND AMID DISCORD Integre Unveils Offshore Fund Integre Advisors has rolled out an offshore version of its long-biased equity hedge fund, with no performance fee. See story, page 2 Paulson Touts Event Arb John Paulson is personally promoting his $14.4 billion Paulson Advantage fund to investors as his firm seeks to grow assets under management beyond the current $33.1 billion. See story, page 6 At Press Time SocGen Loses Sales Director Third Avenue Gets Goldman Pro 2 2 The Americas Babson Hires MD For L.A. Office Bertram Seeks Power Buyouts Martello Shuts Down Shop Highland Touts Mortgage Funds 4 8 9 10 Jay Yoder is preparing to launch a new private equity fund for Tuckerbrook Alternative Investments not long after he expressed an interest in leaving the firm over difficulties with Co-Founder and Managing Principal John J. Hassett. According to court filings, he went so far as to engage in talks with Calder Capital to launch his real assets fund. Tuckerbrook went to court May 1 in a battle with Sumanta Banerjee, ex-portfolio manager, (continued on page 19) Back In The Saddle AGARWAL TO LAUNCH UNIQUE ASIAN STAT ARB FUND Monty Agarwal, the ex-head of Asia Pacific interest rate trading at BNP Paribas who left to form the now-defunct Predator Capital, is taking another stab at launching his own hedge fund firm with what he believes is the first statistical arbitrage fund to focus on Asia ex-Japan. He has founded Palm Beach-based MA Capital Management and will launch the MACM Asia Pacific RV/Macro Fund on June 1. The fund will invest in interest rate and foreign exchange plays in the region. “I cannot find any other hedge fund that does that,” Agarwal (continued on page 18) Registration Relief CALIFORNIA CANS HEDGE FUND PLAN Europe Tiburon Halves Taiwan Exposure Euronova Finds Seed Partner FIM To Up Distressed Exposure 10 11 13 Departments Data Zone Mandate Scoreboard Search Directory 13 14 17 COPYRIGHT NOTICE: No part of this publication may be copied, photocopied or duplicated in any form or by any means without Institutional Investor’s prior written consent. Copying of this publication is in violation of the Federal Copyright Law (17 USC 101 et seq.). Violators may be subject to criminal penalties as well as liability for substantial monetary damages, including statutory damages up to $100,000 per infringement, costs and attorney’s fees. Copyright 2008 Institutional Investor, Inc. All rights reserved. ISSN# 1544-7596 For information regarding subscription rates and electronic licenses, please contact Dan Lalor at (212) 224-3045. The California Department of Corporations won’t be going ahead with a controversial proposal that, had it been adopted, would have forced some hedge fund advisers to register with the department unless they elected to sign up with the Securities and Exchange Commission, according to AIN sister publication Compliance Reporter. The failed proposal aimed to deal with what Preston DuFauchard, commissioner of the department, called “a gap in regulation between the SEC and the state of California” by (continued on page 19) $882 Million Hurdle GLG THUMPED IN FIRST QUARTER London giant GLG Partners, already buffeted by the abrupt departure of star portfolio manager Greg Coffey, lost 7.6% across its hedge funds in the first quarter, with 15 of 21 funds in the red. Many of the $24.6 billion firm’s funds are now well below their highwater marks, including its largest hedge fund, the $5 billion GLG Emerging Markets Fund, which is down 19% this year to April 30 and needs to recover about $882 million before it starts to generate performance fees, said Noam Gottesman, chairman and ceo, during a (continued on page 18) Check www.iialternatives.com during the week for breaking news and updates. AIN051208 8/5/08 20:10 Page 2 Alternative Investment News www.iialternatives.com At Press Time Third Avenue Hires Goldman Associate Steven Chua, formerly of Goldman Sachs, has joined the $25 billion Third Avenue Management as a research analyst May 1. He will focus on undervalued securities, distressed and special situations. Calls to Chua were referred to Bridget Smith, spokeswoman for the firm, who did not have an immediate comment by press time. At Goldman, Chua was an associate in the leveraged finance group within the investment banking division, focusing on leveraged loans and high-yield bonds. Previously he worked at Boston Consulting Group on corporate restructuring. Spokesmen from both firms did not return calls. Well-known investor Martin Whitman runs Third Avenue, which manages hedge funds, mutual funds and managed accounts. Integre Rolls Out Offshore Fund Integre Advisors launched an offshore version of its long-biased U.S. equities strategy, D.G. Value Partners Fund, on May 1. The Integre Offshore Fund was due to open with $100 million. Will Kelly, junior analyst, could not confirm launch assets. Michael Marrone, chief operating officer and chief compliance officer, previously told AIN the fund was launched based on interest from foreign investors. It is domiciled in Luxembourg and charges a 2% management fee, with no performance fee. Marrone said investors had expressed a preference for long-biased strategies to charge management fees only. SocGen Sales Director Quits Nader Salman, director of institutional sales in Société Générale Asset Management’s alternatives division in London, has resigned and left the firm at the beginning of May. He had focused on sales to Middle Eastern investors and has not yet been replaced. An official at the firm confirmed his departure but declined to comment further. Salman could not be reached on his mobile phone. Salman’s resignation follows that of Alastair Smith, head of hedge fund sales for Europe and the Middle East, who left SocGen late last year (AIN, Oct. 15). Smith joined hedge fund firm Polar Capital in February, to head up U.S. and Swiss sales. Smith was unable to provide details of Salman’s next move. Tell Us What You Think! May 12, 2008 EDITORIAL PUBLISHING TOM LAMONT Editor BRISTOL VOSS Publisher (212) 224-3628 STEVE MURRAY Deputy Editor DOUG CUBBERLEY Executive Editor ROBERT MURRAY Managing Editor and London Co-Bureau Chief (44-20) 7303-1705 SUZY KENLY Reporter (212) 224-3978 HARRIET AGNEW Associate Reporter [London] (44-20) 7779-8261 CORRIE DRIEBUSCH Associate Reporter (212) 224-3271 SARAH KLEIN Associate Reporter (212) 224-3648 LOGAN SHORT Esteemed Industry Observer [email protected] VENILIA BATISTA AMORIM London Co-Bureau Chief (44-20) 7303-1718 STANLEY WILSON Washington Bureau Chief (202) 393-0728 HARRY THOMPSON Hong Kong Bureau Chief (852) 2912-8097 KIERON BLACK Sketch Artist PRODUCTION DANY PEÑA Director LYNETTE STOCK, DEBORAH ZAKEN Managers MICHELLE TOM, MELISSA ENSMINGER, BRIAN STONE, JAMES BAMBARA, JENNIFER BOYD Associates ARCHANA KAPUR Associate Marketing Manager (212) 224-3421 JAMES MERRINGTON Asian and European Marketing Manager [London] (44-20) 7779-8023 VINCENT YESENOSKY Senior Operations Manager (212) 224-3057 DAVID SILVA Senior Fulfillment Manager (212) 224-3573 SUBSCRIPTIONS/ ELECTRONIC LICENSES One year - $2,645 (in Canada add $30 postage, others outside U.S. add $75). DAN LALOR Director of Sales (212) 224-3045 DMITRY MELNITCHOUK Account Executive (212) 224-3724 AIDEN NEVILLE Account Executive [London] (44-20) 779-8076 [email protected] REPRINTS DEWEY PALMIERI Reprint & Permission Manager (212) 224-3675 [email protected] CORPORATE GARY MUELLER Chairman & CEO CHRISTOPHER BROWN President STEVE KURTZ Chief Operating Officer JENNY LO Web Production & Design Director ROBERT TONCHUK Director/Central Operations & Fulfillment MARIA JODICE Advertising Production Manager (212) 224-3267 Customer Service: PO Box 5016, Brentwood, TN 37024-5016. Tel: 1-800-715-9195. Fax: 1-615-377-0525 UK: 44 20 7779 8704 Hong Kong: 852 2842 6910 E-mail: [email protected] ADVERTISING AND BUSINESS PUBLISHING JONATHAN WRIGHT Publisher (212) 224-3566 ERIK KOLB Editor, Business Publishing (212) 224-3785 PAT BERTUCCI, MAGGIE DIAZ, LANCE KISLING, ADI HALLER Associate Publishers LESLIE NG Advertising Coordinator (212) 224-3212 Questions? Comments? Criticisms? Do you have something to say about a story that appeared in AIN? Or is there information you’d like to see published? Whether you’re irate with your boss, would like to discuss a new business strategy or crow about a big hire, give us a call. Managing Editor Robert Murray can be reached at (44-20) 7303-1705 or [email protected]. 2 ANTHONY DeROJAS Senior Marketing Manager (212) 224-3099 ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. Editorial Offices: 225 Park Avenue South, New York, NY 10003. Tel: (44-20) 7303-1705 [London] Email: [email protected] Alternative Investment News is a general circulation weekly. No statement in this issue is to be construed as a recommendation to buy or sell securities or to provide investment advice. Alternative Investment News ©2008 Institutional Investor, Inc. ISSN# 1544-7596 Copying prohibited without the permission of the Publisher. Project2 3/11/08 3:04 PM Page 1 Global multi-asset class execution. Advanced liquidity management tools. Innovative investment technologies. www.bnyconvergex.com Convergence works wonders. It all comes together at BNY ConvergEx Group: Sophisticated global liquidity and execution management solutions in over 90 markets to help you achieve your investment and trading objectives. Innovative, customized capabilities for equities, fixed income, options, futures and foreign exchange. Plus liquidity management and order management tools and strategies that ensure maximum performance. All delivered by some of the best, most experienced minds in the industry, operating on an agency basis. So our only interest is putting your interest first. Liquidity & Execution Management • Investment Technologies • Intermediary & Clearing Services © 2008 BNY ConvergEx Group, LLC. All Rights Reserved. Where trading and technology converge AIN051208 8/5/08 20:10 Page 4 Alternative Investment News www.iialternatives.com May 12, 2008 The Americas Sogoloff Launches Quant Strat Horton Point has launched its first offering, a quantitative strategy, May 1. The Gallery Master Fund comes in both domestic and international versions. The fund was due April 1 but Dimitri Sogoloff’s firm had to delay the launch due to market conditions and some last-minute investor issues (iialternatives.com, April 11). Sogoloff declined to specify launch assets but said that the fund was in the $100-200 million range. He expects that it could grow to billions. The investment minimum is $5 million with a 2% management fee and a 20% performance fee. Credit Suisse and Deutsche Bank are the prime brokers. Sogoloff co-founded Alexandra Investment Management in 1996 and left 10 years later before establishing Horton Point. Babson Adds MD To New West Coast Office Private equity and mezzanine firm Babson Capital Management has hired Benjamin Silver as a managing director to co-head the firm’s Los Angeles office, its first on the West Coast. Silver will focus on the smallto mid-cap market space spanning Salt Lake City to California, and from Vancouver Benjamin Silver down to San Diego, Michael Hermsen, managing director, said. Silver will work alongside Michael Ross, managing director, also in L.A. Previously, Silver spent two years at GE Commercial Finance as senior v.p. of the corporate lending group in Beverly Hills. Silver started the end of last month. Michael Hermsen Babson made plans to expand to California last July (iialternatives.com, July 27) and opened the office April 19 due to the mid-market growth in the West Coast, particularly Los Angeles and San Francisco. “We wanted to make sure we had a good, strong presence in the region. Now there’s more commercial activity,” Hermsen said. A few years ago, largecap markets were “going gangbusters but now it’s almost completely dormant.” A lot of the main banks are retrenching now to address their problems and aren’t making credit available to large cap companies, he said, adding that Babson still sees plenty of opportunities in the small- to mid-cap space. Babson will staff the L.A. office with up to two analysts by year’s end. Based in Springfield, Mass., the firm also has a satellite office in Boston. It manages nearly $108 billion. 4 J.H. Whitney Seeks Asian Hedge Funds J.H. Whitney Investment Management in New York is seeking to add several Asiafocused hedge funds to its two funds of funds. These invest in a combined total of 35-40 underlying managers invested in emerging and developed regions in Asia, namely India, China, South Korea, Taiwan, David Puth Thailand and Japan, said David Puth, senior advisor. He declined to quantify the firm’s assets or provide more information about managers the firm may invest in. J.H. Whitney sees signs of reflation in Japan, primarily in Tokyo real estate, and also sees an emergence of private companies in the country. The firm also views South Korea as a positive story as there are more attractive valuations now than prior years. In addition to the two funds of funds, the firm manages four single managers in Tokyo and one U.S. long/short equity strategy. John Hay Whitney founded the firm in 1946, one of the first private equity companies in the U.S. It also has offices in Stamford, Conn., San Francisco and Singapore. SEC’s Gohlke: Get Ready For FAS 157 Asset management firms that use U.S. generally accepted accounting principles, including hedge funds, should update compliance policies and procedures to reflect the Financial Accounting Standards Board’s Statement No. 157 on fair value no later than this fall, according to Gene Gohlke, associate director in the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations. FAS 157 became effective for public companies’ fiscal years beginning after Nov. 15, 2007. It outlines a framework for measuring fair value under U.S. GAAP and expands disclosures about such measurements. Public companies and mutual fund firms have always understood that FAS 157 would apply to them because they are required to report under U.S. GAAP. Hedge funds have been less sure because they don’t have to use GAAP, although many do. Beyond that, asset management firms of all types have been unsure as to what is expected of them by the SEC in terms of compliance. Gohlke said the 2004 general compliance rules require firms to keep up with regulatory changes such as new accounting standards. He suggested they consider providing guidance on how marking to market may be done in areas such as bonds and loans. FAS 157 requires financial statements to be broken down into three categories: market quotations, broker quotes ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. Project4 5/1/08 2:20 PM Page 1 Actually, we’ve already met. The trust and securities division of LaSalle Bank is proud to announce our new name, LaSalle Global Trust Services.™ Our name may have changed, but we’re the same dedicated securities and trust professionals who listen first, then deliver solutions— from impeccable CDO agreements to complex trust restructurings—designed around your multifaceted needs. Our client services team attends to every detail, relying on our global resources and technological innovation to turn their know-how and state-of-the-art reporting to your advantage. Knowledgeable about industry regulation and proficient in diverse structures, we provide proven securitization and trustee results. With more than $2.1 trillion in assets under administration and 3,000 securitizations administered, we’re poised to help you benefit in countless ways from 15 years of demonstrated success. So say hello. Contact Doug Hart at 1.312.904.6578 (Americas) or Michael Tolentino at 44.20.7174.9500 (Europe). CDOs CMBSs RMBSs DOCUMEN T CUS TODY s ESCROW SERVICESs IPAs F UND SERVICES LaSalle Global Trust Services is a trademark of Bank of America Corporation. Bank of America, N.A. LaSalle Bank N.A. LaSalle Bank Midwest N.A. Bank of America National Association (London Branch) © 2008 Bank of America Corporation AIN051208 8/5/08 20:25 Page 6 Alternative Investment News www.iialternatives.com May 12, 2008 The Americas (cont’d) and other factors, such as models. “Firms will need to make sure they have procedures in place to make sure these categories work.” The process of adapting to FAS 157 will demand a lot of resources and time, compliance staff said. A chief compliance officer at a hedge fund firm based in New York said that his firm’s new valuation policy, currently under development, will test to compare the selling price of securities to net asset values to “see if a pattern of overvaluation is occurring.” “CCOs need to be working closely with their finance people because there are a lot of technical issues that need to be addressed,” said a compliance chief at a New York-based mutual fund. He said his goal is to have revised policies in place by fall in time for the firm’s annual audit. A spokeswoman for the FASB declined to comment. Paulson Seeks Money For Event Arb Fund John Paulson’s $33.1 billion Paulson & Co. is raising money for the $14.4 billion Paulson Advantage fund, his event arbitrage strategy. Paulson himself is touting the fund and spoke at an investor event held by Bear Stearns’ capital introduction team Tuesday morning in New York, addressing family John Paulson offices and funds of hedge funds, among other investors. He advised the audience to minimize equity exposure, maintain a short credit bias, and prepare for long distressed opportunities, according to an attendee. Paulson Advantage includes onshore, offshore and levered versions. Paulson did not provide a target for asset-raising. This year through March, the onshore fund is up 6.46%, the offshore fund 7.38% and the levered version up 11%. His onshore merger arbitrage fund is up 4.5% and offshore 5.66% through March, with a combined total of $8.3 billion. He did not disclose this year’s returns for his credit funds, which have $10.4 billion total. Paulson’s merger arbitrage and credit funds are closed to new investors, although Paulson did say he will reopen the credit funds when there are more opportunities. He did not elaborate. Several of Paulson’s funds dipped slightly in April by using credit default swaps to bet that Bear Stearns would collapse and default on their debt. After JPMorgan announced it would acquire Bear Stearns, spreads on the bets widened as investors gained confidence in the stocks. One Paulson fund that invests in mergers and bankruptcies dropped 3.4% while another 6 dropped about 2%. It could not be learned which of Paulson’s funds dropped. Calls to Paulson were referred to Armel Leslie, spokesman for the firm, who declined to comment. A Bear Stearns spokesman did not return calls by press time. Newgate Bullish On Korean Financials, Shorts Chinese Telecoms Newgate Capital Management, the Greenwich, Conn., firm that manages $4.5 billion primarily in long-only money, has been making money with its maiden hedge fund via long positions in Korean financials, and betting short on several Chinese telecom and technology names. The Newgate Asia Opportunity Fund launched on Jan. 1 and has returned 2.3% this year through May 2, said Matthew Peterson, partner and portfolio manager. The fund is long Korean financials Kookmin Bank and Hana Financial Group, as well as holding a position in Samsung. The evaluations of Korean financials are extremely attractive, and while most people invest in China and India, there are plenty of good opportunities in Korea, Peterson said. The country is often overlooked and Korea’s new government is “expected to be much more business and development friendly,” he added. “We think that some of the Chinese telecom names are overvalued,” Peterson said of the fund’s short book, declining to name specific companies. Newgate decided to enter the alternatives space in order to profit from shorting companies. “We want to take advantage of those companies that are not well positioned,” Peterson said. “We’re very bullish [on emerging markets] long term, but there is a lot of volatility in these markets.” The fund is open to new investors and is approaching highnet-worth individuals, family offices, funds of hedge funds, pensions and endowments as it seeks to increase its assets to $50 million by the summer. The firm’s long-only clients have shown an interest in its first hedge fund, including Canadian bank Desjardins Bank and Dutch-pension fund MN Services. The firm had plans to launch the hedge fund two years ago, but wanted to ensure they had a talented staff in place to manage the fund. “Everyone in this business thinks they’re geniuses and the second-coming, but we wanted to add staff [before rushing the launch],” Peterson said. David Lee joined the firm last September from Rohatyn Group, a spin-off of Julian Robertson’s Tiger Management, where he managed one of the firm’s Asia long/short offerings. Newgate is in the early stages of preparing to launch its second hedge fund, a global commodity equity strategy (AIN, May 5). ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. Project5 9/21/06 9:24 AM Page 1 9ÕÀÊÃiVÕÀÌiðÊ*ÀVi`° 7 iÊÞÕÊÜÀÊÜÌ >À`Ì«ÀViÊÃiVÕÀÌiÃ] ÞÕÊii`Ê>ÊÃÕÀVi ÞÕÊV>ÊVÕÌÊ° -Ì>`>À`ÊEÊ*À½Ã -iVÕÀÌiÃÊÛ>Õ>Ìð /Ê-,6 ,/ - +1/9Ê,-, ,-Ê-"1/" - - 9ÕÊ ÜÊ Ì iÊ L}Ê «ÀÛ`iÀÃÊ vÊ }L>Ê ÃiVÕÀÌiÃÊ iÛ>Õ>ÌÃ°Ê ÕÌÊ `Ê ÞÕÊ ÜÊ Ü >ÌÊ >iÃÊ -Ì>`>À` EÊ *À½ÃÊ `vviÀiÌ¶Ê 7Ì Ê ÛiÀÊ ÎxÊ Þi>ÀÃÊ vÊ iÝ«iÀiViÊ Ê Ì iÊ «ÀV}Ê LÕÃiÃÃ]Ê Üi½ÀiÊ VÌÕÕÃÞ iÝ«>`}ÊÌÊiiÌÊÞÕÀÊiÛÛ}Êii`Ã°Ê -]Ê -]Ê -]Ê "ÃÊ >`Ê ÀiÊ pÊ Üi½ÛiÊ }ÌÊ ÞÕÊ VÛiÀi`°Ê `]Ê ÜiÊ ÜÀÊ VÃiÞÊ ÜÌ Ê ÞÕÊ ÌÊ >ÌV«>ÌiÊ>`Ê>``ÀiÃÃÊiÜÊ>ÀiÌÊ`iÛi«iÌðÊÊ Üi`}i]Ê `i«i`iVi]Ê >`Ê `ÀiVÌÊ >VViÃÃÊ ÌÊ Ì iÊ «ÀviÃÃ>ÃÊ Li `Ê Ì iÊ Ì }°Ê ̽ÃÊ Ü >ÌÊ ÞÕ iÝ«iVÌÊvÀÊ>Ê>ÀiÌÊi>`iÀ° ÀÊÀiÊvÀ>Ì\ÊÊiÀV>ÃÊ£°Ó£Ó°{În°{xääÊÊÊÕÀ«iʳ{{Êä®ÓäÊÇ£ÇÈÊÇ{x{Ê ÊÊÊÊÊÊÊÊÊÊÊÊÊÜÜÜ°ÃÌ>`>À`>`«ÀðVÉ«ÀV} -iVÕÀÌiÃÊiÛ>Õ>ÌÃÊÃiÀÛViÃÊ>ÀiÊ«ÀÛ`i`ÊLÞÊ-Ì>`>À`ÊEÊ*À½ÃÊ-iVÕÀÌiÃÊÛ>Õ>ÌÃ]ÊV°]Ê>ÊÜ ÞÊÜi`ÊÃÕLÃ`>ÀÞÊvÊ/ iÊVÀ>ÜÊ «>iðÊ>ÞÌVÊÃiÀÛViÃÊ>`Ê«À`ÕVÌÃÊ«ÀÛ`i`ÊLÞÊ-Ì>`>À`ÊEÊ*À½ÃÊ>ÀiÊÌ iÊÀiÃÕÌÊvÊÃi«>À>ÌiÊ>VÌÛÌiÃÊ`iÃ}i`ÊÌÊ«ÀiÃiÀÛiÊÌ iÊ`i«i`iViÊ>` LiVÌÛÌÞÊvÊi>V Ê>>ÞÌVÊ«ÀViÃðÊ-Ì>`>À`ÊEÊ*À½ÃÊ >ÃÊiÃÌ>Là i`Ê«ViÃÊ>`Ê«ÀVi`ÕÀiÃÊÌÊ>Ì>ÊÌ iÊVwÊ`iÌ>ÌÞÊvÊ«ÕLVÊvÀ>ÌÊÀiViÛi`Ê`ÕÀ}Êi>V Ê>>ÞÌVÊ«ÀViÃð AIN051208 8/5/08 20:26 Page 8 Alternative Investment News www.iialternatives.com May 12, 2008 The Americas (cont’d) Bertram Looks For More Power Buyouts California-based private equity firm Bertram Capital Management is seeking to buy out three or four more companies in the $10-15 million range in the next year to integrate into Power Distribution, Inc. (PDI). Bertram bought PDI last year and acquired electrical component manufacturer Marelco Power Systems at the end of January. The firm seeks new acquisitions that are similar to Marelco and create intermediate goods needed for PDI’s final product. Vice President Kevin Yamashita said while Bertram does primarily U.S.-based buyouts, if it saw an add-on acquisition for PDI that was located overseas it would consider it. Besides seeking new companies to acquire, Bertram is also still working on a new fund, which it hopes to launch in the next 1218 months. The new fund will be larger than Bertram’s current Bertram Capital Growth I, which has about $350 million assets under management. Due to the preparation for a new fund and new acquisitions, Bertram has grown to 15 professionals. Bertram moved from Palo Alto to a larger office in San Mateo last month. Illinois Firm Plans Offshore Launch Central Square Management, located in Warrenville, Ill., plans on launching an offshore version of its maiden hedge fund, an industrial, technology and healthcare strategy, in August. Kelly Cardwell, founder and portfolio manager, said he wanted to launch the offshore version after it built a year’s track Kelly Cardwell record. “There’s more to talk about now,” he said on the Central Square Partners fund’s performance, which is up 15.4% through April and up 28% since its inception last August. “Some people wondered if the skill set from a long-only background translates in a hedge fund environment. At least for my personal style, it does.” Cardwell’s fund, solely invested in the U.S., managed to avoid the turmoil created by last summer’s credit crunch. “There tended to be some crowded trades,” he said. “A lot of people were long technology and short financials. But when the Fed cut rates, people got whipsawed.” Cardwell avoided investing in financials. “Avoiding that trap helped me quite a bit.” He likes technology companies—“I find it easier to find longs on the tech side”—and sees lots of good company balance sheets with good cash flow. He declined to name specific long and short positions. Three of the biggest contributors to his success last year include long 8 positions on Microsoft and technology company BEA Systems. He is no longer in these positions. Cardwell has begun to market the fund for the first time and is speaking with high-net-worth individuals, family offices and funds of hedge funds as he seeks to increase his assets to $50 million from $10 million. Prior to founding the firm, Cardwell spent 10 years at Fidelity Investments, managing several long-only funds. He is the sole member of Central Square, and does not have plans to add anyone. “Too many cooks spoil the broth,” he said. Goldstein Revises Counterclaim Against Galvin Phil Goldstein, the founder of Bulldog Investors who battled the U.S. Securities and Exchange Commission and won, has added another offense to his counterclaim against Massachusetts’ Secretary of the Commonwealth, William Galvin. In addition to the claim that Galvin’s suit violates first amendment rights, Bulldog is maintaining that Galvin and the Commonwealth do not have personal jurisdiction over the matter. Galvin took action against Bulldog in February last year for reportedly offering information about his hedge funds to prospective investors that failed to meet SEC qualifications. Goldstein countersued late March but has recently added another argument to his counterclaim. “Galvin doesn’t have personal jurisdiction over us; we don’t have sufficient contacts in Massachusetts. Who made him sheriff of the internet?” said Goldstein. Oral arguments are expected to begin in June. “Apparently there isn’t enough fraud in Massachusetts. At the time, Galvin saw how Eliot Spitzer launched an aggressive law enforcement campaign,” said Goldstein. He feels that Galvin was trying to launch his own aggressive campaign against hedge funds. “Spitzer was his hero. I don’t think he is anymore,” he quipped. On Feb. 5 of this year, Goldstein wrote a letter to Douglas Scheidt, associate director and lead counsel for the Division of Investment Management at the SEC, requesting a “no action” ruling on Bulldog’s website. “If we cannot receive ‘no action’ assurance by February 29, 2008, we intend to seek declaratory and injunctive relief in federal court to permit us to maintain an open website without fear of an enforcement action,” the letter states. Goldstein said that Bulldog has been maintaining a dialogue with individuals at the SEC and as long as it appears that they are acting in good faith he will continue to be patient and see where things head. That said, he does not anticipate waiting the year out. Calls to Galvin were referred to Brian McNiff, spokesman, who declined to comment. Scheidt did not return calls. ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. AIN051208 8/5/08 20:10 Page 9 May 12, 2008 www.iialternatives.com Alternative Investment News The Americas (cont’d) Martello Closes Doors Martello Investment Management is closing up shop because it failed to gather sufficient assets. Although the fund of hedge funds oversaw $1 billion, it had just $250 million in assets under management, upon which it collected a typical hedge fund fee. The remaining $750 million represented assets under advisory, for which Martello earned a lower fee, said David McCarthy, managing partner and cio. Since inception in 2002 until the end of 2007, all Martello’s funds generated positive returns, both cumulatively and in each calendar year. Most of the firm’s track record consisted of single digit returns, McCarthy said, adding that hedge fund investors probably wanted higher profits. For the past 18 months Martello achieved double digit returns, but that came during a turbulent market when investors were putting out fires, not making new allocations. Hedge fund investing dried up in a similar way in 1998, he added. Returns this year through April 14 ranged from -3.2% to 5.6%. “It’s a tough environment to raise money and we didn’t want to push the rock up the hill any further,” he explained. The Great Barrington, Mass., firm’s investments will be liquidated over the next couple of months. Martello invests in hedge funds that employ tactical trading strategies, including discretionary and quantitative global macro, trend, systematic non-trend, relative value, regional and resource. The firm provides exposure to global currency, fixed income, commodities and equity markets. Martello launched a fund of resources and commodity hedge funds in January. McCarthy is working with his staff to help them find jobs elsewhere. “We have a good group of people and want to see them placed well,” he said. As for his own plans, McCarthy doesn’t intend to start discussing job opportunities until mid-summer. He is focusing his efforts until then on closing Martello. McCarthy managed GAM’s trading funds of funds from 1994 until 2000. He has also worked for The Atlantic Philanthropies, Rayner & Stonington, Brown Brothers Harriman and McKinsey & Co. Hedge Funds & Alternative Investments Summit & Exposition JUNE 16-17, 2008 | GRAND HYATT | NEW YORK CITY Get critical information on the issues impacting the hedge fund industry. Don’t miss our two-day program with 2 tracks, 12 educational sessions and over 55 speakers. FEATURED SPEAKERS: James Chanos President and Founder Kynikos Associates, LP Philip N. Duff Chief Executive Officer and General Partner Duff Capital Advisors REGISTER TODAY! www.sifma.org/hfunds2008 Eric Mindich Chief Executive Officer Eton Park Capital Management, LP Chair of the Asset Managers’ Committee Formed by the President’s Working Group PROGRAM TOPICS INCLUDE: • Best Practices • Current Legal & Regulatory Issues and Trends • Constructing an Effective Hedge Fund Compliance Program • How to Deal with a Regulatory Inspection and Examination • Prime Brokerage and Counterparties • Hedge Fund Workshop • Risk Management • Fund-Linked Derivatives • The Role of the Administrators and Banks • Hedge Fund Distribution Sponsorship and Exhibit Opportunities Available! For additional information, please contact Kevin Fox 212.313.1292 or [email protected] AIN051208 8/5/08 20:10 Page 10 Alternative Investment News www.iialternatives.com May 12, 2008 The Americas (cont’d) AlphaOne Survives S&P Losses With IPO Shares Highland Makes Push For New Mortgage Funds AlphaOne Asset Management’s AlphaOne Partners Fund’s strong returns from longs such as one in Colossus Minerals in January and February are helping maintain year-to-date performance despite losses from two Standard & Poor’s composite indices. The fund, launched by the Toronto-based firm in December, was up for its first three months, including a 21% return in February. One big reason for this, Manager Steve Palmer said, was the fund’s IPO share purchase of Colossus, which gained 114% during the month. Despite the fund seeing profits in 21 of 25 shorts since launch, declines in the S&P/TSK Venture Composite and S&P/TSX Composite Total Return indices contributed to a loss of about 10.5% in March. On the negative side, the fund’s investment in technology company 01Communique Laboratory Inc. took a downturn that surprised Palmer. The stock dropped by 80% in March after a judge initiated a re-examination of the company’s patent, causing an indefinite delay in the company’s patent infringement case that was supposed to go to trial that month. Even with these losses, Palmer said he’s confident in the fund, and is excited by many of his investments, in particular IntelGenx (IGXT), a biotechnology company that is moving to the venture exchange this month. The fund bought the stock at 70 cents about a month ago; it is now trading at about 95 cents. The small-cap long-biased hedge fund manages about $17.5 million. The investment minimum is $150,000 with a fee structure of 2/20. Mortgage-focused investment firm Highland Financial Holdings Group is seeking assets for two new strategies that have been launched as an attempt to profit from the credit crisis. These are a multi-strategy hedge fund that rolled out in January, and a distressed offering that debuted in December. As with all of Highland’s offerings, which now number four hedge funds and three managed accounts, the two new strategies are dedicated to mortgages. The multi-strategy fund will use only small amounts of leverage and will invest in any kind of mortgage securitization, from AAA-rated securities to those unrated and below investment grade. David Kaplan, managing director and head of North American marketing and client services, declined to comment on the name of the funds, current fund sizes, or fees. He did say investors are primarily institutional, with many pensions, endowments, funds of hedge funds and family offices. The typical range of investments is $2-5 million, and the funds will close when they grow to $300500 million apiece. Kaplan acknowledged that there is no shortage of distressed funds right now, but noted that many funds that launched in the fall jumped the gun, as the market continued to deteriorate. Highland brought onboard Morgan Stanley alum Gary Mendelsohn at the end of March to manage the multi-strategy fund. Europe Tiburon Cuts Taiwan Exposure Tiburon Partners is cutting long exposure to Taiwan in its long/short Greater China Tiburon Tao Fund, following elections in the country that led to profits for the fund. “We believe the easy money has, in the short term, been made in Taiwan,” said Mark Martyrossian, one of the founding partners Mark Martyrossian at the $220 million firm. Meanwhile, the firm is also increasing exposure to China in both the long and short books. The changes mean net exposure is being roughly halved, from over 80% to around 40%. The fund built up exposure to Taiwan ahead of the Kuomintang of China (KMT)’s landslide victory in the 10 legislative elections in January, said Martyrossian. The “bolt-on” Taiwanese portfolio accounted for 40-50% of the fund’s total long exposure and held positions in brokers and engineering companies, which would immediately benefit from reinvestment in the country of money previously invested offshore by KMT supporters, he explained. On the back of this political development, which also saw the KMT win the presidency in March, Taiwan has been Asia’s best-performing market. Tiburon is now reducing the Tao fund’s exposure to Taiwan to lock in profits. Tiburon has also been increasing exposure to China, where value is appearing. On the long book it is adding some Chinese names which are listed both in and outside China, because prices have been hammered and stocks are experiencing positive ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. AIN051208 8/5/08 20:10 Page 11 May 12, 2008 www.iialternatives.com Alternative Investment News Europe (cont’d) changes. The firm is particularly bullish on consumer stocks and other Renminbi earners. Also in the portfolio are some technology-related stocks in Taiwan as well as one or two resource names, said Martyrossian. The firm has been adding to the short book where there are some banks, and petrochemical companies in Taiwan, he added. Western demand for exports is slowing, but China’s domestic consumption and investment growth is still very strong, said Martyrossian. Tao is up 21% year-to-date and 47% since its launch on May 1 last year. It has outperformed the Hang Seng China Enterprises Index and the Eurekahedge Greater China Hedge Fund Index, which were down 13.3% and 5.04% in March. Tao is managed by Partner Jeff Coggshall, who is also is the lead manager for the Formosa Growth Fund, the firm’s Taiwanese fund. Cazenove Seeks Marketer Cazenove Capital Management is seeking to hire a marketer to focus on the Benelux and Nordic regions. The move follows the departure of James Cahill, who left last month to join Axa Investment Management’s business development team in Qatar (iialternatives.com, April 3). Robin Minter-Kemp The new hire will be responsible for the distribution of hedge funds and long-only offerings, Robin Minter-Kemp, managing director, told AIN. The individual will be based in London and will report to Minter-Kemp. Cazenove has £11.5 billion in assets and six hedge funds. Euronova Identifies Seed Partner London firm Euronova Asset Management UK has identified a seed partner that will provide an undisclosed amount of capital for its latest roll-out, the Euronova Large Cap Fund, which launched in March. An official declined to name the partner or offer more information about the deal until the paperwork has been finalized, most likely by early June. “March was a diabolical month to launch,” the official said. Europe-based funds have had extreme difficulties raising money, he added. Euronova’s goal is to raise $500 million for the fund by year’s end. Simon Connell manages the long/short European equities strategy, which focuses on the top 300 stocks with a volatility target of 8-10%. Launched in early March, it uses derivatives, futures, options and ETFs to hedge. Henry Reid manages its other fund, the Euronova Smaller Companies Fund, which launched in 2000. Laven Adds Consultant To Geneva Office London-based hedge fund consulting firm Laven Partners has lined up a mid- to senior-level consultant who will join its Geneva office by the end of the month. The new hire is needed to support the increasing amount of operational work and due diligence the firm is undertaking for its clients, which include hedge fund managers and investors. Jerome Lussan, founder, declined to name the new hire. The office opened in August with two people. The firm decided to set up a Swiss outpost because more and more hedge funds were looking to be based there (iialternatives.com, May 4, 2007). Lussan said Switzerland is a popular centre for asset-raising because it is well-regarded and less regulated than London. He added that Laven plans to grow the Geneva office to five, but that recruitment is quite difficult as the firm is looking for candidates who are qualified to work at a hedge fund and are willing to relocate to Geneva if they do not already live there. KGR To Issue ‘C’ Shares For Asia FoF KGR Capital is seeking to roughly double assets in its London-listed fund of Asian hedge funds to £100 million from £55 million, by raising at least £45 million from a placing of ‘C’ shares early in the summer. There has been increased demand for shares in KGR Asia Dynamic 1, especially from investors that see direct investment in Asia as too volatile, said Mark White, ceo at the London and Hong Kong firm. There is also interest from investors who want access to hedge funds that exploit market inefficiencies in the less mature Asian capital markets, he added. The recent reduction in U.K. capital gains tax to 18% from 40% increases the appeal of this kind of offering for U.K.domiciled investors, because returns are taxed as capital gains rather than as income tax, which remains at 40%, said White. Although U.K. institutional investors such as pension funds don’t pay capital gains tax, they will be attracted to the daily price quote and daily liquidity that the fund’s listed status brings, he said. ‘C’ shares are a temporary structure, converted into normal shares once the capital raised has been fully invested. This gives existing shareholders the reassurance that their position won’t be diluted. The Guernsey-domiciled company has returned 7.17% annualised since it launched in November 2005. It is down 4.7% this year to March 31. Fees are 1/10 with a highwater mark. To receive email alerts or online access, call 800-715-9195. 11 II Events-HF Awards-new 4/24/08 11:10 AM Page 1 AIN051208 8/5/08 20:10 Page 13 May 12, 2008 www.iialternatives.com Alternative Investment News Europe (cont’d) FIM Seeks Distressed Managers FIM, the London firm with $4.6 billion in funds of hedge funds, is seeking to add distressed hedge funds to its range of portfolios over the course of 2008. There are many good companies trading at distressed levels, Brendan Robertson, head of investments, told AIN. FIM is looking for hedge fund managers who can take advantage of these mispricing opportunities, as well as capitalising on the increase in default rates over the medium-to-long term, he said. The firm is in the early stages of conducting due diligence. Robertson declined to quantify the number of distressed managers that FIM will add, but said the move forms part of the firm’s plan to add about 30 hedge fund managers across its range of strategies this year. FIM’s five funds of funds are multistrategy, relative value, event-driven and distressed, and equityfocused offerings. Data Zone PERFORMANCE SNAPSHOT: MULTI-STRATEGY HEDGE FUNDS The table below displays some of last year’s top performing multi-strategy hedge funds, according to data provided by Eurekahedge. Fund Multi-Strategy Rising China Fund Artradis AB2 Fund Lionhart Global Appreciation Fund SPCEurope Segregated Portfolio Brigadier Capital DQS Absolute Return Fund Pure Alpha Strategy Artradis Barracuda Fund Claritas Hedge FI HG Allocation Claritas Hedge Phalanx Japan-AustralAsia Multi-Strategy Fund GLC Diversified Fund Singleton Fund Graham Global Investment Fund II Proprietary Matrix Portfolio Finisterre Global Opportunity Fund Magic Capital Fund CMT Global Fund Graham Global Investment Fund II EIP Overlay Fund Solent Credit Opportunities Master Fund Millburn International (Cayman) Region March 08 Return 2008 YTD return 2007 return Annualised Std Deviation Sharpe Ratio AuM (US$ Mln) Pinpoint Investment Advisor Artradis Fund Management (Pte) Global Asia inc Japan -7.21 3.75 19.08 18.39 26.09 56.96 29.47 16.55 2.31 2.15 198 2589 Lionhart Investments Cohen & Company DQS Investment Management BV Bridgewater Associates Artradis Fund Management (Pte) Claritas Servicos Financeiros Hedging Griffo Asset Management Phalanx Capital Management GLC Washington Asset Advisors Europe Global Global Global Asia inc Japan Brazil Brazil Asia inc Japan Global North America -8.03 4.11 -4.07 2.37 2.95 1.43 1.43 5.46 2.21 4.00 13.64 13.42 12.70 12.29 11.97 10.39 10.37 10.16 8.55 7.54 43.78 27.85 17.08 9.63 35.26 8.10 8.05 59.61 18.90 64.42 8.88 6.31 15.98 9.42 7.79 7.74 8.39 43.25 11.40 18.33 1.21 4.65 1.01 0.74 1.07 2.79 2.57 1.69 0.77 2.80 15 210 5 5925 1938 37 13 20 234 30 Global Emerging Markets North America Global Global Asia ex Japan Global Global 1.05 -1.68 5.00 1.47 0.73 2.64 -0.83 -2.41 6.74 6.42 6.38 5.87 5.85 5.81 5.67 5.65 9.03 18.70 45.40 29.52 10.40 22.90 3.35 15.52 13.27 6.58 19.94 6.43 13.23 6.28 8.57 15.65 0.39 1.88 1.95 4.03 0.46 1.00 1.12 0.41 348 304 20 106 1214 15 238 58 -2.56 -2.00 -1.53 -0.86 -5.56 -4.79 0.55 -1.00 25.20 9.15 13.98 14.44 7.93 5.20 3.95 5.36 0.88 1.40 4.13 1.39 Manager Graham Capital Management Finisterre Capital Washington Asset Advisors CMT Asset Management Graham Capital Management Enhanced Investment Products Solent Capital Partners Millburn Ridgefield Corporation Regional Multi-Strategy Indices Eurekahedge Asia Multi-Strategy Hedge Fund Index Eurekahedge Europe Multi-Strategy Hedge Fund Index Eurekahedge Latin America Multi-Strategy Hedge Fund Index Eurekahedge North America Multi-Strategy Hedge Fund Index Notes: * Ranked by 2008 YTD Returns Eurekahedge Commentary Hedge funds faced another difficult month this March, against the backdrop of persistent concerns on the slowing of global growth and the likelihood of a recession in the US. The composite Eurekahedge Hedge Fund Index shed 2.2%. Volatility across the underlying markets, particularly prior to the Fed’s 75 bps rate cut on 18 March, coupled with a weak state of the credit markets, were among the factors responsible for the month’s losses. Multi-strategy funds finished the month registering losses averaging 2.4%. In terms of regional mandates, North America was the least negative (-0.9%), as gains from short positions in equities and currencies helped managers offset some of the losses suffered from commodity-exposure and other allocations. Latin American players lost 1.5%, owing to losses suffered from equity trades, among other things; the MSCI Latin American Index was down 3.6%. European and Asian managers were down 2% and 2.6% respectively; poor performance of the financial sector and a visible economic slowdown in the region affected the former, while notable declines across some equity markets (such as India and China), among other things, impacted the latter. To receive email alerts or online access, call 800-715-9195. 13 AIN051208 8/5/08 20:10 Page 14 Alternative Investment News www.iialternatives.com May 12, 2008 Mandate Scoreboard Powered by: i i s e a r c h e s . c o m The table below shows new allocation commitments gained by alternative managers year-to-date through May 7. The 2007 column denotes last year’s ranking. Wins represent the number of new mandates the firm has won this year. 2008 Tally Rank 1 2 3 4 5 6 7 8 9 10 11 12 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 2007 131 99 15 63 3 23 332 111 6 34 57 57 13 110 22 80 49 89 36 125 31 97 34 50 39 40 41 42 43 44 27 43 49 50 51 52 53 54 55 56 57 162 349 349 19 5 224 106 149 61 48 78 14 Week of May 5, Wins Firms Hired J.C. Flowers & Co. BridgePoint Capital Credit Suisse TPG Capital Bridgewater Associates Advent International CVC Capital Partners Wins 1 6 6 3 2 8 6 FountainVest Texas Pacific Group Lone Star Funds Riverstone/Carlyle Deutsche Asset Management Mellon Capital Management Carlyle Group PIMCO Grove Street Advisors Baring Asset Management Avenue Capital Management Barclays Global Investors Oak Hill Capital Partners Schroder Investment Management Wayzata Investment Partners Summit Partners Macquarie Infrastructure Group Gresham Investment Management Actis Partners Group Apollo Investment Corporation JPMorgan Asset Management Nordic Capital The Banc Funds Company The Jordan Company State Street Global Advisors Barlow Partners HSBC Private Equity Invesco Private Capital Mariner Partners Noble Environmental Power ABN AMRO Asset Management RCG Longview AnaCap Financial Partners New Mountain Capital Madison Dearborn Partners Emerald Infrastructure Development Fund Huntsman Gay Capital Partners Landmark Partners Lexington Partners Versa Capital Management “Angelo, Gordon & Company” Henderson Global Investors ABRY Partners Siguler Guff & Co. Yucaipa American Funds Harris Alternatives Investment Mgt BlackRock The Blackstone Group AP Alternative Assets Marathon Asset Management Pacific Alternative Asset Mgt Co. Vista Equity Partners Aisling Capital Ares Management AvalonBay Communities Evergreen Pacific Partners Evnine-Vaughan Associates Fillmore Capital Partners Green Equity Advisors JLL Partners Knight Vinke Asset Management 2 3 2 2 1 1 5 5 1 2 1 3 1 2 2 4 3 2 2 1 4 2 2 2 2 2 1 1 1 1 1 1 1 1 3 3 1 1 1 1 1 3 1 3 5 2 2 4 4 2 2 2 2 1 1 1 1 1 1 1 1 1 Total* 4000 1075 1025 1025 900 801 752 600 580 550 530 500 500 486 425 400 317 309 305 300 270 265 260 235 235 230 230 215 210 210 200 200 200 200 200 200 200 200 196 175 165 160 155 150 150 150 150 150 145 139 125 121 120 118 108 101 100 100 100 100 100 100 100 100 100 100 100 100 100 Client Asset Type New York State Teachers’ Retirement System Los Angeles County Employees’ Retirement Association (LACERA) Louisiana State Employees Retirement System Private equity (U.S.) Private equity (U.S.) Tactical asset allocation 175 100 850 Teachers’ Retirement System of Louisiana Los Angeles City Employees Retirement System (LACERS) Los Angeles County Employees’ Retirement Association (LACERA) Private equity (Europe) Private equity (buyout) Private equity (Europe) 125 22 100 New York State Teachers’ Retirement System Private equity (U.S.) 150 New York State Teachers’ Retirement System Energy 100 Pennsylvania Public School Employees Retirement System Distressed 309 Etera Mutual Pension Insurance Private equity N/A Pennsylvania Public School Employees Retirement System Distressed (U.S.) 175 New York State Teachers’ Retirement System Private equity (U.S.) 100 California Public Employees Retirement System (CalPERS) Pennsylvania Public School Employees Retirement System New York State Teachers’ Retirement System Private equity (buyout) Private equity (U.S.) Private equity (U.S.) 150 150 150 New York State Teachers’ Retirement System Private equity (U.S.) 75 New York State Teachers’ Retirement System Pennsylvania Public School Employees Retirement System Pennsylvania Public School Employees Retirement System Private equity (U.S.) Not specified Not specified 100 100 100 New York State Teachers’ Retirement System Private equity (U.S.) 100 ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. Amount* AIN051208 5/8/08 4:59 PM Page 15 May 12, 2008 www.iialternatives.com Alternative Investment News Mandate Scoreboard (cont’d) 2008 Tally Rank 2007 74 75 76 8 284 82 142 84 85 89 72 318 40 91 92 93 95 96 97 100 101 102 103 104 71 64 46 264 93 247 105 222 76 140 123 124 125 126 127 128 129 130 131 132 9 205 85 39 178 136 137 138 92 7 170 Firms Hired Pershing Square Capital Management Strategic Capital Management Tenaska Capital Management WLR Recovery Fund Lehman Brothers Sun Mountain Capital ARCH Venture Partners Celtic House Kearny Venture Partners VantagePoint Venture Partners Ventures West Walden International Babcock & Brown Hutton Collins & Company Macquarie Funds Management BLUM Capital Partners Caspian Capital Partners Catterton Partners Crow Holdings Horsley Bridge Partners PAI Management HgCapital Southwest Funding UBS Global Asset Management EACM Advisors Natural Gas Partners Platinum Equity Chicago Equity Partners Milestone Partners Split Rock Partners Morgan Stanley Investment Management ANZ Asset Management LGT Capital Partners Exponent Private Equity Apax Europe Aristeia International Caltius Capital Management Cardinal Partners Essex Woodland Health Ventures Five Arrows Leasing Group Fore Convertible Fund Gold Hill Venture Lending Partners Gso Capital Partners HarbourVest Partners International Investment Group KSL Capital Partners Lydian Overseas Partners Orleans Capital Management Pinnacle Asset Management Stark Investments Summit Investment Partners Towerbrook Capital Partners Wellington Management Company HFA Asset Management Pantheon Ventures Fletcher Asset Management ERE Rosen Real Estate Securities Graham Partners TimberVest Longitude Capital Management Crestview Capital Partners Aurora Capital Partners Adams Street Partners M.D. Sass Swander Pace Capital Tailwind Investment Partners Handelsbanken Asset Management Tactical Global Management Carlyle Capital Corporation CB Richard Ellis Investors Grosvenor Capital Management Huff Asset Management Paladin Capital Group Patriot Capital Partners Week of May 5, Wins Wins 1 1 1 1 2 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 1 2 1 1 1 2 2 1 1 1 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 1 1 1 2 2 1 2 1 1 1 1 1 1 1 1 1 1 1 1 Total* 100 100 100 100 90 90 86 86 86 86 86 86 78 78 76 75 75 75 75 75 75 70 69 68 68 65 60 60 60 60 57 56 51 51 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 50 47 46 45 42 40 38 35 35 30 30 30 30 30 29 28 25 25 25 25 25 25 Client Asset Type Amount* Pennsylvania Public School Employees Retirement System Not specified 100 Nationwide Building Society Pension Fund New York State Teachers’ Retirement System Infrastructure Private equity (Europe) 78 78 Teachers’ Retirement System of Louisiana Private equity (U.S.) 75 Etera Mutual Pension Insurance Private equity N/A Etera Mutual Pension Insurance Private equity N/A New York State Teachers’ Retirement System Private equity (U.S.) 50 Indiana Public Employees’ Retirement Fund Private equity (U.S.) 50 Indiana Public Employees’ Retirement Fund Private equity (U.S.) 35 For a complete listing of the Mandate Scoreboard, please visit www.alternatives.com To receive email alerts or online access, call 800-715-9195. 15 DVSbwad:Layout 1 4/14/08 10:50 AM Page 1 In Association With: CPE Credits! Valuation of Distressed Securities Workshop ed enown g R y b Led vestin sed In ltman! s e r t s i D rd I A , Edwa Expert Master Complex Valuation Techniques to Maximize Investment Opportunities JULY 17-18, 2008 • DOWNTOWN CONFERENCE CENTER • NEW YORK CITY Why You Should Attend: The markets are on the verge of a dramatic increase in defaults, and the number of bankruptcies in the US and Europe is escalating. That means opportunities in distressed securities abound. But when is the right time to increase portfolio allocation to distressed firms and securities? And how do you know you are valuing your assets correctly? This one and a half day intensive workshop will provide delegates with a new skill set for better understanding how to value distressed securities, a command of risk management issues and an overview of new accounting and legal regulations surrounding bankruptcy. The expert faculty will offer hands-on, in-depth model and structures analysis and pricing guides for this ever-changing and volatile market. Learn Advanced Tools & Techniques On: Seminar Faculty: Edward I. Altman, Max L. Heine Professor of Finance, STERN SCHOOL OF BUSINESS, NEW YORK UNIVERSITY; Director of Research in Credit and Debt Markets, NYU SALOMON CENTER, Advisor to CITIGROUP, CONCORDIA ADVISORS, MILLER-MATHIS, INVESTCORP, SERASA, AND KPMG • Keith Allman, Managing Director, NSM CAPITAL MANAGEMENT principal Trainer and Founder, ENSTRUCT • Ben Branch, Professor of Finance, UNIVERSITY OF MASSACHUSETTS, AMHERST and Chapter 7 Bankruptcy Trustee, BANK OF NEW ENGLAND CORPORATION • Walter Curchack, Partner and Chair of the Bankruptcy, Restructuring and Creditors' Rights Practice Group, LOEB & LOEB LLP • Warren Hirschhorn, Managing Director and Leader of the Portfolio Valuation Practice, DUFF & PHELPS, LLC • Espen Robak, CFA, President, PLURIS VALUATION ADVISORS LLC • Aryeh Sheinbein, Vice President and Portfolio Analyst, PLAINFIELD ASSET MANAGEMENT • • • • • • • • • • Supply and demand trends and factors in the distressed debt market Correlation between distressed debt and other asset classes Risk and return analytics in the high yield and distressed debt markets Recent LBO trends and credit risk Strategies for distressed investing: passive, active, active control, arbitrage, international Models for predicting defaulting companies Valuation in bankruptcy court FAS 157: application of new regulations Best practices in valuation policy The value of a cause of action and capital budgeting Who Should Attend: • • • • • • • • • • • • Investment Managers Portfolio Managers Analysts Strategists Risk Managers Directors Heads of Research Consultants Lawyers Accountants Traders Compliance Officers From: • Money Management Firms • Hedge Funds • Private Equity Funds • Funds of Funds • Distressed Funds • Investment Banks • Solution Providers • Law Firms • Accounting Firms • Valuation Firms • Consulting Firms visit www.iievents.com for faculty updates To Register: Call 1.800.437.9997 or 212.224.3570 • www.iievents.com • [email protected] AIN051208 8/5/08 20:10 Page 17 May 12, 2008 www.iialternatives.com Alternative Investment News Search Directory Powered by: i i s e a r c h e s . c o m The following directory includes search activity for the week. The accuracy of the information, which is derived from many sources, is deemed reliable but cannot be guaranteed. All amounts are in US$ millions unless otherwise stated. Total Assets Mandate Size Mandate Region Asset Type Kimberly-Clark Australia Retirement Fund, Milsons Point 141 - International Private equity MLC Implemented Consulting The scheme has postponed plans to invest in private equity for the next 18 months because it finds market conditions unfavourable for such investments. Laerernes Pension, Copenhagen 5356 - Global Not specified None The fund plans to almost double its exposure to alternatives to 20% in the long term starting this year. In 2007, it increased its investments to 10.3% from 8.9%. No further details are available. PensionDanmark (Danish Labour Market Pension Fund), Copenhagen 15365 - Global Infrastructure, timber, private equity None The scheme plans to analyse its alternatives investments including infrastructure, timber and private equity. The scheme does not see any meaningful diversification in these asset classes. Perpetual Investments, Sydney 36856 - Global Hedge funds, infrastructure, private equity None The firm plans to invest A$600 million over the next two years in its multi-manager alternatives portfolio. It is actively evaluating funds of hedge funds against building an internal program of directly-accessed funds with its advisor Sovereign Investment Research. It will also invest in infrastructure and private equity. Alma College, Alma, Mich. 115 - US Private equity, commodities, hedge funds, venture capital - The fund plans to make inroads into alternatives and is eyeing its first allocations to private equity and commodities. It is also considering hedge funds and venture capital in the longer-term. It will downsize its domestic equity portfolio by 5% to fund its alternatives foray by year’s end. FMC Technologies, Chicago 633 - US Funds of hedge funds - The fund plans to invest 3% of total assets in funds of hedge funds by cutting its 84.4% equity portfolio. AMU-Gruppens Pensions Stiftelse, Stockholm 85 - Global Not specified - The scheme is actively analyzing alternatives with a view to make a maiden foray into the asset class, possibly by the end of the year. This investment decision is subject to prior approval of its trustees. It has not yet set specifics on size, minor classes or funding for the investment. - Global Infrastructure, commodities Mercer The scheme is looking to grow its allocation to alternatives and is analysing infrastructure and commodities, with a view to invest within 2008. It will also grow its private equity exposure to 7% from 5% and will seek new managers. Fund & Location West Midlands Metropolitan 15032 Authorities Pension Fund, Wolverhampton Consultant Comments Canadian Pacific Railway, Calgary 13373 19.96 Canada Commodities Towers Perrin The fund is looking to add commodities to its portfolio for the first time, with an eye on oil and gas investments. It will likely invest over the next year. Canadian Pacific Railway, Calgary 13373 - Canada Hedge funds, currency hedging Towers Perrin The fund is planning to invest an undisclosed percentage of assets in hedge funds for the first time in 2008-2009. The fund is also planning to allocate to currency hedging strategies later this year. Korean National Pension Service, Seoul 221938 - Global Hedge funds Mercer VBV Pensionskasse, Vienna 6917 - Global Infrastructure, real estate - The fund is analysing infrastructure with a view to make a maiden foray into the asset class this year. The fund is also planning to double its real estate exposure to 8% for higher returns. The fund relies on a tender process to hire asset managers. Robert McBride Pension Fund, Manchester 127 - Global Not specified - The scheme is considering alternatives as part of its strategy review and may make its first move into this area. Massachusetts Institute of Technology, Cambridge, Mass. 9980 - US Commodities, private equity - The fund plans to add to its commodities investments in the next two years. It also expects to boost its private equity allocation in the coming year. It presently invests 12.6% in private equity. Denver Employees’ Retirement Plan 2100 105 US Private equity Callan Associates The fund is looking to further increase its private equity exposure at the expense of high-yield bonds. It recently upped private equity to 5% of total assets from 4% by reducing high-yield by 1% to 5%. IBM Switzerland Employee Welfare Foundation, Zurich 2835 - Global Commodities, private equity None The scheme plans maiden forays into commodities and private equity as part of diversification efforts. No specifics on the timeframe, investment size or funding for the investments have been set. Armstrong World Industries, 3200 Lancaster, Pa. 128 US Hedge funds - - The fund plans to invest 4% in hedge funds by slashing its equity exposure in 2009. It is seeking to hire one asset manager for the asset class. London Borough of Merton Local Government Pension Fund 683 - Global Not specified - The scheme has started analysing all types of alternatives and may make a first move into the asset class. Farmington Hills Retirement System, Farmington Hills, Mich. 150 - US Hedge funds Merrill Lynch Consulting Services Group The fund is actively seeking to hire a hedge fund manager for its first foray into the asset class at 5%. It has interviewed several undisclosed managers. The fund is analysing hedge funds before making a first move into the asset class. It expects to get the approval to invest in the asset class by its board later this year. It may invest through multi-strategy funds or funds of hedge funds. For further information on iisearches’ daily search leads and searchable database of mandates awarded and lost since 1995, 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. 17 AIN051208 8/5/08 20:10 Page 18 Alternative Investment News www.iialternatives.com AGARWAL TO LAUNCH (continued from page 1) said. “Most of the hedge funds that focus on non-Japan are either equity- or credit-based, or pure directional macro plays. But applying this sophisticated strategy, I haven’t seen it.” The fund will trade interest rate and foreign exchange derivatives, as well as equities. “April saw a reprieve from the recent credit market led volatility,” read an investor presentation sent to AIN. “We view the recent equity market rally as more of a short covering rally rather than the establishment of long positions in the equity markets. The market needs to see an extended period of ‘no more tape bombs’ before long term confidence returns.” Agarwal also believes Asian countries that export to the U.S., namely Korea, the Philippines, Taiwan and Singapore, will be affected by the weakening dollar. “I have been trading these markets since 1997. I probably know these markets better than anybody,” he said. The capacity of the fund is $500 million. He is speaking with family offices, funds of hedge funds and highnet-worth individuals. Goldman Sachs and Barclays Capital are the prime brokers for the MACM fund. Fees are 2/20 with a high-water mark, and the investment minimum is $1 million. Agarwal left BNP at the end of 2002 to form Predator (iialternatives.com, May 8, 2003). He launched the Predator Global Fund in January 2004, only to close it two years later to join III May 12, 2008 Funds, the $5 billion Boca Raton, Fla., firm. “III provided an attractive opportunity at the time to execute [the same] strategy with a much larger capital base,” he said on closing Predator. In two years, Predator’s returns were LIBOR +4.5%. However, after spending a few years at III, he decided it was time to start his own fund again. “Once you’ve worked for yourself, it’s extremely hard to go work for anybody else,” he said. —Suzy Kenly GLG THUMPED (continued from page 1) conference call to investors. The worst performing fund in the first quarter was the GLG Credit Fund, down 21.1%. The losses put more pressure on GLG, which has suffered $1.7 billion in redemptions since Coffey, its high-performing emerging markets fund manager, quit last month. A report published by Lehman Brothers on April 16 calculates that GLG’s funds, including long-only strategies, are on average 8% below their high-water mark. The document also estimates GLG will generate performance fees of $244 million in 2008 and $488 million in 2009, against its previous estimates of $672 million and $727 million, respectively. The firm’s three other emerging markets funds enjoyed positive returns. The only other funds to do so were the GLG Alpha Select Fund (9%), GLG Esprit Fund (1%) and the GLG Corporate Access Program Get instant, online access to Alternative Investment News for everyone in your firm. This Corporate Access Program (CAP) is being offered now for ONE PRICE — Call now to get your discount and start your firm’s subscription to www.iialternatives.com. Your CAP Subscription Includes: Alternative Investment News – > Daily email updates available exclusively to subscribers > Breaking news sent to each designated person at your firm > A cost-effective way to disseminate information > Protection against copyright violations — your firm is protected > Mobile-friendly website > Blackberry-friendly email delivery The Only News Breaking Source You Need for Hedge Fund, Private Equity and Other Alternatives FOR MORE INFORMATION PLEASE CONTACT: Dan Lalor | 212.224.3045 | [email protected] AIN051208 8/5/08 20:10 Page 19 May 12, 2008 www.iialternatives.com European Opportunity Fund (3.7%). Gottesman told investors he expects assets in the emerging markets funds to decline threefold to about $2 billion from the $6.3 billion that Coffey is currently managing. Gottesman also expects most of the ninestrong emerging markets team to leave with Coffey. The main emerging markets fund has returned 71.09% annualised since launch in November 2005. It was up 43% in 2007. Gottesman pointed out that excluding the performance of the four emerging markets strategies, GLG’s hedge funds are down only 3.4% in the first quarter. Lehman’s report concludes by giving the GLG stock a ‘buy’ rating, as “the stock is expected to outperform the unweighted expected total return of the sector coverage universe over a 12-month investment horizon.” Talia Druker, a spokeswoman for GLG, had no comment. —Harriet Agnew CALIFORNIA CANS (continued from page 1) revising a state exemption that has allowed investment advisers with 15 or fewer clients and $25 million or more in assets to avoid registration requirements. The plan, which was similar to the SEC rule rejected after it was challenged by Bulldog Investors’ Phil Goldstein, had drawn fire from critics claiming it would drive hedge fund advisers to states with lighter regulation. “We are withdrawing the regulations due to an ongoing parallel process at the federal level which may preempt or obviate the need for state action at this time,” DuFauchard said in a statement May 1. Mark Leyes, director of communication, said the department decided to drop the proposal following the release of the U.S. Department of the Treasury’s blueprint on regulatory reform. He said the commissioner was not responding to a specific part of the Treasury’s plan, just “that the effort is going on.” Under the Treasury’s plan, the Federal Reserve would be given wider powers as a “market stability regulator.” Announcing the blueprint in March, Treasury Secretary Henry Paulson said the Fed would collect information from a range of financial institutions, including hedge funds, to evaluate capital, liquidity and margin practices across the financial system. Leyes hinted, however, that the door may not be closed to future plans. “We decided not to proceed with the proposed rules and ended it for now,” he said, adding, “We could always come back [with another proposal], but it would have to come back from scratch.” According to Donald Davidson, a partner at Bingham McCutchen’s San Francisco office, most states require advisers to hedge funds to register with their local authorities unless they choose to register with the SEC. Some—such as California, New York and Connecticut—do not. “It’s no accident that the hedge fund industry is concentrated in those states,” he said. “This Alternative Investment News proposal would have stripped California of that benefit and now it can maintain status quo. Advisers won’t be voting with their feet now.” —Josh Stoffregen TUCKERBROOK’S (continued from page 1) for control of two of its funds (iialternatives.com, April 30). Court documents obtained by AIN include an email dated Jan. 25 from Yoder to Banerjee, in which he states that he has asked “JJH,” presumed to be Hassett, to negotiate his separation from Tuckerbrook. “I have had it with his lies and threats,” Yoder wrote. The email indicates that Yoder told Turner Smith, cofounder and managing principal, that he would stay on if the firm set up a separate subsidiary for private equity and that Yoder never had to deal with Hassett again. Yoder also asked Banerjee to introduce him to contacts at Calder. Hassett told AIN, “There is always a point in time around the launch of a new fund that the economics of the parties can become contentious. Investment firms live with this reality as part of their day-to-day business. The email that you read from Jay Yoder simply reflects that tension at about the time that the economics were being negotiated for fund two.” Yoder declined to comment. Smith did not return calls. The firm will launch a second version of its Tuckerbrook Real Assets Fund I this quarter, for which Yoder is the portfolio manager. The Tuckerbrook Real Assets Fund II will hold $100 million, nearly double the first fund’s $55 million and Yoder will be the manager of this fund as well. According to Hassett, the fund is a response to investor interest and the firm expects a number of clients from the first fund to participate in the newest version. “Jay remains an employee of the company, happily employed I believe, and we think it’s going to be well received by fund one investors and new investors,” Hassett said. The investment minimum is $1 million. Tuckerbrook has $300 million under management and is based in Marblehead, Mass. —Sarah Klein Quote Of The Week “I have had it with his lies and threats.”—Jay Yoder at Tuckerbrook Alternative Investments, who considered leaving the firm over difficulties with Managing Principal John J. Hassett, according to court documents (see story, page 1). One Year Ago In Alternative Investment News Alexandra Investment Management Co-Founder Dimitri Sogoloff set up Horton Point, which planned to launch up to 20 algorithmic strategies. [The firm aimed to launch the Gallery Master Fund April 1 (AIN, March 12). Horton Point delayed the launch slightly due to current market conditions, but it debuted on May 1 with launch assets in the $100-200 million range (see story, page 4).] To receive email alerts or online access, call 800-715-9195. 19 ICAP-Sailing-layout 4/22/08 10:04 AM Page 1 HB@OL`qjdsC`s` Sqtrsxntql`qjFhudxntqsq`cdsgdtkshl`sd`cu`ms`fdvhsg qd`k,shld+dmc,ne,c`x`mcghrsnqhb`kl`qjds c`s`rntqbdcchqdbskxeqnlHB@OHB@Ooqnuhcdr`mtmqhu`kdcuhdvnefkna`k l`qjdsr+vhsglnqdsg`mTRC0-4sqhkkhnmsq`cdc c`hkxhmhmsdqdrsq`sdr+bqdchs+dmdqfx+enqdhfm dwbg`mfd`mcdpthsxcdqhu`shudrTkshl`sdc`s`+tkshl`sd`cu`ms`fdÎeqnl HB@O+sgdaqnjdqnebgnhbd- @bghdudlnqd-Fnsn vvv-hb`o-bnl.l`qjdsc`s` 7 ©ICAP plc 2008. ICAP¨, ICAP Market Data and other service marks and logos are service marks of ICAP plc and/or one of its group companies. All rights reserved. Entities within the ICAP group are regulated as applicable.
