citadel vets form hong kong firm africa

Transcription

AIN073007
7/26/07
4:08 PM
Page 1
PERELLA WEINBERG TO LAUNCH HEDGE FUND
JULY 30, 2007
VOL. VIII, NO. 30
Web Exclusive
Prudential Investment
Management’s Pru Alpha strategy has
pocketed big gains by shorting the
subprime mortgage market.
iialternatives.com
At Press Time
RAB, Silver Creek Make Hires
2
U.S. News
Corbin Preps New FoF
SAC Hires Media Fund PM
Search Digest
3
4
4
European News
Cheyne PM Resigns
Gargour Braces For Credit Crash
Search Digest
5
7
7
Private Equity News
HLM Heads To San Francisco
Perella Weinberg Partners, the corporate advisory firm formed one year ago by Joseph
Perella and Peter Weinberg, is planning to launch a long/short equities hedge fund in
October. The Perella Weinberg Partners Aileron Fund will be managed by David Zusman, a
new partner who joined the firm in March, according to a prime brokerage document. An
official at the firm did not comment by press time.
Perella Weinberg has around 100 employees in New York and London. It is not clear how
many of these will work on the hedge fund, which will be focused on U.S. equities. Zusman
joined the firm from BrightStream Asset Management, where he was a partner managing an
(continued on page 12)
CITADEL VETS FORM HONG KONG FIRM
Chris Hsu and Danny Yong, former high-ranking members of Citadel Investment Groups’s
Hong Kong office, have founded Abax Capital Partners, a hedge fund firm focused on
special situations. Its first funds, Abax Upland Fund and Abax Arhat Fund, launched earlier
this month, according to a Goldman Sachs prime brokerage document. Calls to the Hong
Kong-based firm were not returned by press time.
At Citadel, Hsu founded the special situations Asia group and Yong was in charge of
macro and relative-value trading and a founding member of the firm’s Hong Kong office.
Donald Yang, formerly head of debt capital markets for Hong Kong and China at Merrill
7
Sixth Opening
Under The Hood
Mont Pelerin Short Bets Pay Off
8
Market Focus
Hedgies Pack Art Collectors List
9
Departments
Data Zone
Mandate Scoreboard
Living On The Hedge
With Logan Short
9
10
12
AFRICA-FOCUSED PE FIRM
TARGETS ASIAN INVESTORS
Washington, D.C.-based Emerging Capital Partners, the
$1.1 billion private equity firm that invests solely in
Africa, is preparing to launch its sixth fund. The firm is
targeting investors based in Asia, particularly China, for the
first time and expects to raise significantly more than $550 million
PENTIUM PLOTS LEASING STRATEGY
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Vicente Zaragoza’s Pentium Fund is planning to launch a fund early next year that will lease
hard assets to corporations to ensure a regular rate of return, as first reported on AIN’s Web
site iialternatives.com Tuesday. Unlike Pentium’s other strategies, this fund will invest directly
rather than via other funds, and will seek to avoid volatile investments in favour of high but
stable returns, explained Zaragoza. Using leverage, the fund will aim to return 40% net of
fees. “I don’t want to make money for clients via the markets anymore,” he said. “I want a
cash-flow generating fund.” He said he was only aware of two or three similar strategies.
The fund will finance aircraft, boats, real estate, medical equipment and other corporate
Check www.iialternatives.com during the week for breaking news and updates.
AIN073007
7/26/07
4:22 PM
Page 2
Alternative Investment News
www.iialternatives.com
July 30, 2007
At Press Time
Silver Creek Adds MD
New York-based fund of hedge funds firm Silver Creek
Capital Management has hired Stephen Prince as managing
director. Prince joins the $8 billion firm from Pivot Capital Advisors, a New
York-based hedge fund firm he founded in 2005. Prince starts at Silver Creek
Aug. 1 and will report to Eric Dillon, cio.
How, if at all, Prince’s departure will affect Pivot Capital is unclear, as a
spokesman did not return a call by press time. At Silver Creek, Prince will manage
a long/short equity fund of funds strategy in a new position the firm created for
him. Prior to founding Pivot in March 2005, Prince worked at Greenwich,
Conn.,-based Claiborne Capital Group as a senior analyst for three years. A
spokesman for Silver Creek declined to comment.
RAB Hires Marketer From SocGen
RAB Capital, the $6.7 billion London-based hedge fund firm, has tapped Adry
Thomas from Société Générale to join its marketing team. Thomas said he
joined the firm June 26 and will focus on marketing the next hedge fund to be
launched by RAB, a global macro strategy, as well as three fixed income funds
already managed by the firm.
The global macro fund, RAB Market Cycles, will launch in August and will be
managed by Bijal Shah and Dhaval Joshi, both of whom joined RAB from
SocGen in May. Thomas said he worked with the duo at the French firm, where
he marketed their strategy. A SocGen spokesman had no comment at press time.
Aside from the Market Cycles fund, Thomas will promote RAB’s credit
opportunities, and European loan and Asian fixed income funds.
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Mass PE Firm Preps Launch #3
Springfield, Mass.-based private equity firm Babson Capital Management, a
subsidiary of MassMutual Financial Group, is planning to launch its third
private equity and mezzanine fund in a year’s time, according to Michael Ross,
managing director. Ross was hired in mid-June to manage and market the firm’s
existing Tower Square I and Tower Square Capital Partners II strategies on the West
Coast. He will head up the $103 billion firm’s new office in Los Angeles,
scheduled to open in October.
Launched in 2003, Tower I closed to new investors with $265 million. Tower
II has $1 billion under management, but the firm is still seeking to invest the
fund. The firm seeks mid-size companies between $50-250 million across various
sectors, including manufacturing, service and health care.
Once the L.A. office opens, the firm will seek to hire 8-10 people in the next
few years, with positions varying from managing director to analysts. All
employees in the L.A. office will report to Ross.
Prior to joining Babson, Ross worked at UnionBanCal Equities, an affiliate of
Union Bank of California for nine years. He founded the mezzanine department
and worked in the leveraged equity sponsor finance department.
Ross reports to Michael Hermsen, Michael Klofas, and Rick Spencer, all
managing directors in Springfield.
2
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AIN073007
7/26/07
4:22 PM
Page 3
July 30, 2007
U.S. News
Havens Adds MD, Trader
New York-based Havens Advisors has hired Allison Bellini as
managing director and portfolio manager and Michael Burcher
as equities trader as first reported on AIN’s Web site,
iialternatives.com. Both started working at the $375 million firm
earlier this month.
At Havens, Bellini will help manage the debt side of the
portfolios. Previously, she was an analyst at CRT Capital Group,
an investment bank based in Stamford, Conn., covering
distressed and high yield debt. She was there for 11 years.
Burcher joins the firm from Jefferies & Co. where he was an
equities trader for 9 years.
Founded by Nancy Havens in 1995, the firm launched its
maiden fund, Havens Partners, in 1996. Prior to founding her
firm, Havens was a portfolio manager at Bear Stearns for 16
years, becoming the first woman to be assigned to the board in
1992. She no longer holds that position (iialternatives.com, 4/27.)
Corbin To Launch International FoF
Corbin Capital Partners will roll out a
fund of funds investing with Asian and
European hedge funds, including those
with exposure to emerging market
countries. Investors will be able to
customize their exposures and select just the
Asian or European piece. Corbin is putting
Glenn Dubin
together a roster of 20-25 hedge funds, said
Tracy McHale Stuart, partner and ceo. The offering’s title will
probably fit in with Corbin’s tradition of naming funds after
the neighborhood where founders Glenn Dubin and Henry
Swieca grew up.
There are a handful of great emerging market hedge fund
managers, McHale Stuart said, but it is difficult to take short
positions, there isn’t much liquidity, and political risk is
significant. “One of our managers has a Kazakhstan fund. I’m
not sure we’ll go down that path.” Corbin is conducting
extensive manager research. “You have to uncover a lot of rocks,
you have to kiss a lot of frogs,” she said.
This year Corbin has established a small managers’ fund of
funds, an illiquid strategy and a low volatility offering suitable
for inclusion in portable alpha programs. The firm is developing
a track record and will start actively marketing them towards
year-end. The small managers’ fund will include hedge funds
with $50-300 million under management to tap into the return
premium they achieve through being flexible.
The illiquid fund will gain exposure to deals that hedge funds
usually place within side pockets, for instance a single stock
investment. One hedge fund manager has approached Corbin
about co-investing in agricultural land in Latin America; both
land and crops are increasing in price as farmland gets devoted to
producing corn, ethanol and biofuels.
Farallon Adds Managing Member
Farallon Capital Management, the San
Francisco-based hedge fund firm run by Tom
Steyer, has added a 15th managing member.
The firm, which manages more than
$16 billion, has promoted Ashish Pant, who
was a managing director with the firm in the
New York office. Calls to Pant were not
Tom Steyer
returned by press time.
The move means that Pant will likely be an economic
stakeholder in Farallon, said a headhunter. The other managing
members include Steyer and CFO Greg Swart.
Pant, a global portfolio manager, rejoined Farallon in 2001.
He was v.p. of research at Altgate Capital and also worked as an
analyst at Farallon from 1999-2000.
Long Island Firm Adds Marketer
Cedarhurst, N.Y.-based fund of hedge funds firm Penso Capital
Markets has hired Shawn Daigle of Berkeley Capital as
managing director of marketing and business development. The
position at the $1 billion firm was created for Daigle as it
continues the expansion of its existing business.
Prior to joining the firm earlier this month, he was
managing director of marketing on the East Coast at Berkeley,
a hedge fund firm based in San Francisco. Before his tenure at
Berkeley, he worked at Barclays Global Investors in New York
as a business development officer and principal.
The firm may launch a fund of funds focused on Asia,
according to Daigle. Currently its focus is limited to the U.S.,
South America and Europe.
This week, Daigle will be traveling to Europe to seek highnet-worth families and managers for the firm’s latest roll-out,
Penso Symphony Hybrid Class, which invests in long/short, macro,
multi strategy, value and special situations managers, among
others. He seeks to increase its current assets by $100 million to
$300 million total.
Ari Bergmann and Steven Gross co-head Penso. Prior to
founding the firm, Bergmann was head of derivatives at Bankers
Trust and Gross was portfolio manager at Millennium Capital
Management. Daigle reports to Bergmann.
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3
AIN073007
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July 30, 2007
U.S. News (cont’d)
SAC Adds PM To Media Fund
Steven Cohen’s SAC Capital Partners has
hired Mahesh Narayan to manage its
global telecommunications and media
fund. Narayan joined the firm in midJune from Calypso Capital Management,
where he was portfolio manager. Narayan
and a Calypso spokesman declined to
Steven Cohen
comment. The firm recently increased its
shares in wireless networking technology company USA
Technologies through a private placement, purchasing around
1.6 million shares for $6 a share, a total of $10 million
(iialternatives.com, 4/5).
Adult Entertainment Hedge Fund
Adds To Team
Adult Vest, the Beverly Hills-based hedge fund and private
equity firm that seeks to match adult-entertainment businesses
with qualified investors, has added to its team to manage its
hedge fund. Howard Gordon, founder of real estate consulting
firm Gordon Financial Partners, and Jai Latimer of Anchor
Loans, a real estate investment firm, have joined the firm to
manage its maiden hedge fund, expected to launch Oct. 1. The
firm is currently raising money for the fund to offer loans and
mortgages on gentlemen’s clubs and expects to launch with
$100 million. Both Gordon and Latimer report to the firm’s
founder, Francis Koenig.
At Adult Vest, Gordon identifies companies to invest in. He
founded Gordon Financial Partners in Santa Monica, Calif., in
1999. Latimer directly assists Gordon. Before joining the firm,
Latimer was head of investor relations at the Santa Monica,
Calif.,-based Anchor Loans, where he helped raise over
$300 million in private funding for the redevelopment of
distressed properties, according to Koenig.
Gordon joined the firm because of its unique investing
approach. “The investment community has shied away from
the adult entertainment industry in general,” Gordon said.
“The fact is that the pornography industry takes in as much
money as Hollywood.” Koenig estimates the industry to be
worth over $60 billion.
In addition, the firm has hired two director of business
development, Mara Epstein of Private Media Group, a
publicly traded adult entertainment company, and Al Jones of
casino company Boyd Gaming. Additional hires include Govi
Escudero, previously in an unspecified sales role at Merrill
4
Lynch, as a business development associate who will report to
Epstein, and Boris Krakov of Synertech, a web development
company in Los Angeles. He is now Adult Vest’s director of
information technology.
Wash. Firm Plans Frontier
Markets Strat
Investment Frontiers Research in University Place, Wash., is
preparing the launch of a frontier markets hedge fund, its
first strategy. Clifford Quisenberry, founder of the
quantitative research and consulting firm, said he is targeting
$50 million for the long/short strategy that is expected to roll
out in the fall.
The fund will invest broadly, seeking investments in Africa
and the Middle East. “Many people think small markets are
riskier,” Quisenberry said, noting that this is not the case because
the correlations in the frontier markets are low, reducing risk.
Most of the portfolio will be long with short exposure coming
through miscellaneous ETFs.
Prior to founding the firm this April, Quisenberry was
director of research at Seattle-based Parametric Portfolio
Associates, an investment firm that manages structured
equity portfolios.
U.S. Search Digest
The $12.5 billion FedEx Corp. pension plan intends to implement
a selection of liability-driven investment strategies by year-end.
The allocations will likely be spread out among incumbent
managers. The fund may also increase its 5% alternatives
allocation, currently invested in private equity with JPMorgan
Asset Management, Pantheon Ventures and Byrnwood
Partners. Mercer Investment Consulting advises…The
Jacksonville (Fla.) Police & Fire Pension Fund has filed a
third bill with the Florida state legislature for permission to invest
in alternatives. The bill will be reviewed by the State’s house and
senate at the next legislative session in the spring of
2008…Teachers’ Retirement System of Louisiana plans to
commit $1 billion to private equity over the next three
years…Montana Board of Investments is in the process of
increasing its 5.5% private equity allocation to between 8% and
10%. A number of undisclosed managers have been hired. The
fund plans to continue hiring managers opportunistically.
Sources: AIN sister publications Foundation & Endowment Money Management, Money
Management Letter and iisearches.
AIN073007
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July 30, 2007
European News
BlueBay Adds Trio To High-Yield
Distressed Team
London’s BlueBay Asset Management has hired three senior
executives to join its European high yield and distressed
management unit. Lucien Orlovius was hired as general counsel
and Fred Nada and Samantha Wessels as analysts, both focusing
on distressed debt transactions in Europe.
Orlovius was a partner at Mandel, Katz & Brosnan, Nada
was a director in Credit Suisse’s European special situations
group and Wessels was a senior v.p. of the financial house
Houlihan, Lokey Howard & Zukin.
Cheyne PM Exits
Ravi Joseph has tendered his resignation as portfolio manager at
the London-based hedge fund firm Cheyne Capital
Management. A call to Joseph at Cheyne was referred to a
spokeswoman who declined to comment.
Joseph was involved in running the firm’s Queen’s Walk
Investment Fund, which in June reported losses of €67.7 million
in the fiscal year ending March 31. The fund invested in residual
pieces of mainly residential mortgage-backed securities.
Cheyne Capital oversees about $12 billion in funds investing
in both debt and equity markets.
Thames River FoF Gains With
Paulson Sub-Prime Short
Thames River Capital’s opportunistic fund of funds, the Warrior
Fund, gained ground in June thanks to a position in an eventdriven strategy managed by Paulson & Co. Paulson Advantage
Plus benefited from a large short sub-prime mortgage exposure to
return 18.52% in the month, according to a Thames River
investor letter. Ken Kinsey-Quick, head of multi-manager funds
at Thames River, was travelling and could not be reached. Alex
Kuiper, fund manager, did not return calls.
June saw something of a rebound for the Paulson fund, which
lost 1.44% in April and was Warrior’s lowest performer in May at
84 basis points. Despite the recent wobble, the Paulson fund is
the best-performing position year-to-date within Warrior’s core
portfolio, having returned 51.27%. Warrior also runs a special
situations portfolio, within which other short sub-prime funds
made headway, according to the letter.
Paulson aside, Thames River’s exposure to other high-profile
hedge funds saw mixed results in June. Sandell Asset
Management’s Castlerigg Global Select was the core portfolio’s
biggest loser, dropping 3.7%. Meanwhile, GLG Partners’
emerging markets fund returned 1.44% in June and is up 13.4%
for the first six months of the year. Gartmore Investment
Management’s AlphaGen Tucana European long/short equity
fund dipped slightly, losing 73 bps. Despite this, the fund has
returned 14.12% year-to-date.
Warrior held positions in 16 long/short equity funds in June,
accounting for almost 31% of assets. Four macro funds made up
14.9% of the portfolio, and other significant exposures included
credit (six funds accounting for 12.5%), multi-strategy (four
managers at a total of 12.5%) and event-driven (three managers
at 10.4%). Warrior was up 2.19% in the month and has
returned 13.87% for the year to the end of June.
Tiburon Profits From Property,
Computer Stocks
Tiburon Partners, a London-based firm
focused mainly on Asia, has taken profits in
its holding of a Chinese property developer.
The firm’s new long/short Greater China
fund, Tiburon Tao, had a 5% position in CC
Land, but cut its position to just 0.5% earlier
this month when profits reached around
Mark Martyrossian
40%, said Mark Martyrossian, partner and
founding principal. CC Land focuses on development projects in
the Sichuan province of western China. It has been receiving
increased attention from investors and has “an extremely high
quality land bank in Chongqing and Chengdu and new
additions in the pipeline,” observes a Tiburon investor letter.
“CC Land is the principal beneficiary of China’s ‘Go West’
policy—a push to accelerate economic growth in China’s western
and interior provinces,” it continues.
Tiburon Tao has also taken some profits in Ju Teng, a
manufacturer of plastic casing for notebook computers. The
stock was “a strong contributor” in June and “has seen a dramatic
turnaround as the large [notebook] brand names react to the
success of recent…models making use of Ju Teng’s technology,”
says the letter. With profit taking, Tiburon’s position has since
been cut to 2.5% from 3.5%, said Martyrossian.
Meanwhile Jeff Coggshall, who manages the fund, has changed
his view of Taipei-based online gaming concern GigaMedia. The
fund had a 3% long position in the company which initially made
money. But Coggshall has since turned his exposure into a 3.5%
short position, said Martyrossian. He was unable to give reasons
for the switch, and Coggshall was not available to comment.
Tiburon Tao launched May 1 and was up 6.77% in its first
5
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7/2/07
11:16 AM
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John Benevides,
President,
Family Office
Exchange (FOX)
Anthony E. Malkin,
President,
W&M Properties,
Wien & Malkin LLC
Daniel Kahneman, PhD,
Eugene Higgins Professor
of Psychology,
Princeton University
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AIN073007
7/26/07
4:22 PM
Page 7
July 30, 2007
European News (cont’d)
two months. Martyrossian attributed the strong start to “the fact
that these [stocks] are not ‘in vogue’ names; they’re somewhat
off-piste. It shows we’re not driven by pure momentum.”
Gargour Positioned For More
Credit Turmoil
Louis Gargour’s London-based hedge fund
firm, LNG Capital, is seeking to exploit
difficulties in the credit markets and
expects the ongoing meltdown to continue.
“We’ve had a short bias for the past few
months and it’s beginning to pay off,” said
Gargour, adding that his $25 million multiLouis Gargour
strategy fund is running at around 18% net
short. The firm is focusing primarily on special situations and
event-driven opportunities, along with capital structure
arbitrage, said Gargour. Returns have been “lumpy” but the
fund is up around 5% year-to-date and is targeting 10-12%
returns for the year.
Gargour—who is ex-director of fixed income at RAB
Capital—hit out at managers who have lost ground during the
credit debacle. “They’re not really hedge funds” because they
have failed to protect against downside risk and are not nimble
enough with their exposures, he argued. “A lot of guys have
started up recently, while there’s been a raging bull market,” he
noted. “They’ve got no experience of bear markets.” Managers
have used leverage to increase their long exposure and have failed
to shift to a more neutral position quickly enough, he said.
European Search Digest
Royal Liver Assurance Superannuation Fund is in the very early
stages of considering hedge fund and private equity allocations. This
may lead to new manager hires later this year… The £1.2 billion
Cumbria County Council Superannuation Fund has appointed
BlackRock to assemble and manage a tailored alternatives portfolio
worth up to 10% of its assets. This will include private equity, global
property, funds of hedge funds, single-strategy hedge funds, global
tactical asset allocation, commodities, emerging market debt and highyield debt…Frankfurt’s Pensionskasse der Mitabeiter der
Hoechst-Gruppe VVaG has been analyzing hedge funds and private
equity with a view to invest. It will decide on manager searches early
next year… The CHF1 billion Pensionskasse Unilever Schweiz
will later this year make a first foray into hedge funds, likely 5-10% of
total assets. Investments will be made via a fund-of-funds vehicle
housed within Univest, Unilever’s Luxembourg-based pooled funds
platform, which is administered by Northern Trust. Possible manager
choices include Prisma Capital, Sail Advisors and Goldman Sachs
Asset Management. Kottmann Advisory is assisting the scheme.
Sources: AIN sister publications Global Money Management and iisearches.
Private Equity News
Boston VC To Open
San Francisco Office
Group. HLM’s latest fund, HLM Venture Partners II, closed in
November with $216 million (AIN, 6/26/06). Dan Galles, a
partner at HLM, will join Felsenthal in the new location.
HLM Venture Partners, a venture capital firm focused on health
care information technology, is preparing to open an office in
San Francisco and has hired a new partner, Marty Felsenthal, to
head up the office. Felsenthal joins from Salix Ventures, a VC
firm in San Francisco with a similar investment focus to HLM’s.
With the San Francisco office, expected to open in September,
the firm plans to expand its portfolio of West Coast companies,
according to HLM Partner Ed Cahill. “It’s a strategically
important area for us, with over half of our medical device deals
originating [there], as well as numerous opportunities in heath
care services and health care information technology.”
West Coast companies in the firm’s portfolio include Spinal
Kinetics, which engineers artificial cervical discs, Guava
Technologies, a developer of cellular analysis systems, Pathway
Medical Technologies, which develops medical devices for the
treatment of arterial disease and healthcare IT company Trizetto
Vector Closes Fund At $1.2 Billion
Vector Capital has closed its latest fund, Vector Capital IV, at
$1.2 billion, over three times the $350 million size of its predecessor.
The firm was already cutting equity checks consistent with
a $1.2 billion fund, said Alex Slusky, managing partner. It
paid $75 million in equity to take Register.com private in
2005, $100 million for WatchGuard Technologies in 2006,
and $240 million for SafeNet, which it acquired in March
for $650 million.
Vector will continue its investment strategy of targeting buyouts,
spinouts and recapitalizations of established technology companies,
with a focus on software deals. The fund attracted a number of new
partners, including Harvard Management Company, which
manages endowment and pension assets for Harvard University.
7
AIN073007
7/26/07
4:22 PM
Page 8
July 30, 2007
Under The Hood: AIN’s look inside hedge fund strategies
New Short Strategy Boosts
Mont Pelerin
Mont Pelerin Capital Management’s newly-implemented
short book produced a 10.2% return last quarter, boosting
year-to-date returns to over 11%. Four of its five short
positions contributed to these gains, according to the firm’s
quarterly letter to investors.
Unlike many short strategies, which are designed to reduce
volatility and market correlations, Mont Pelerin’s aims to add
alpha, the letter states. It did not identify the short positions and
calls to the firm were not returned by press time.
In the long book, the best performers last quarter were
Synchronoss (SNCR) and NutriSystem (NTRI), which were
up 58.6% and 33.3%, respectively. NutriSystem was added in
the third quarter of 2006 (AIN, 10/27/06). Synchronoss is a
new addition. “We were initially attracted to this company
because of their business model,” the letter states. The digital
media company’s stable revenue and exposure to the
expanding VOIP market suggest that it will be a strong
performer in the portfolio, it reasons. Tenaris (TS) and
Genentech (DNA) were removed from the long book after
missing earnings expectations.
Riley Renews Push For Regent Sale
Riley Investment Management, the Los Angeles activist
hedge fund firm run by Bryant Riley, has renewed its push
for a sale of Regent Communications. The hedge fund,
which owns 7.4% of the company’s shares, is calling for a
special meeting of shareholders to address the matter. Riley is
pushing for a September meeting because it has received
support from other shareholders, equaling the required 20%.
“If I can just reach out to a few shareholders to get 20%
people are pretty dissatisfied,” said John Ahn, portfolio
manager at Riley.
Riley is floating proposals for shareholders to increase the
board’s size to nine directors and to elect four of its nominees. It
also wants stockholders to be able to fill vacancies on the board.
The board currently has five members and Riley wants to add
four of its nominees to the group, said Ahn.
Riley is calling for a sale because it believes the company
cannot operate profitably as a public concern. Riley asserted
that the company could fetch between $4.50 and $6 per share.
“For small public companies that are in an industry that isn’t
growing there is really no need for them to be public,” said
Ahn. He noted that the company spends $5 million per year
8
just to be public, and that this overhead could be reduced if
Regent were private or part of a larger company. Ahn cited the
recent example of Cumulus Media, which agreed to a
management-led buyout.
Shares of Regent were trading around $3.35 as AIN
went to press last week. Calls to Regent were not returned
by press time.
Loeb Scores With Pogo
Third Point, the activist hedge fund firm run by Daniel Loeb, is
set to walk away with a large gain from its investment in Pogo
Producing. The hedge fund, which owns 7.9% of the company’s
shares, paid an average $45.81 per share for its position in the
oil and gas company, according to a filing with the Securities
and Exchange Commission. Pogo recently agreed to be
purchased by Plains Exploration & Production in a deal that
provides shareholders around $57 per share. This puts Loeb’s
profit at roughly 24%.
Loeb has already blessed the union, agreeing to vote his shares
in favor of the deal, the filing says. Shares of Plains were trading
around $46.81 as AIN went to press last week.
Loeb began attacking Pogo in December, ripping
CEO Paul van Wagenen and calling for the company to
be sold (AIN, 12/11). He planned a proxy fight, but settled
with the company in March. A Third Point official declined
to comment.
Steel Scores With Stratos Play
Steel Partners, the activist hedge fund firm run by Warren
Lichtenstein, has cashed out of Stratos International with a
healthy gain. The semiconductor company completed a merger
with Emerson July 16, where the global technology giant paid
$8 per share. Steel, which had a 15% position, sold over
2.1 million shares that day for an estimated gain of 88%,
according to a Securities and Exchange Commission filing.
The hedge fund began purchasing shares in 2005 and
eventually amassed its position by paying roughly $3.75-5.50 per
share. Steel began agitating the company that year and in 2006
commenced a proxy fight. Lichtenstein planned to run a slate of
directors and put in a bid to buy the company for $7.50 per
share. Stratos rejected the offer and put off the annual meeting.
Instead it hired CIBC World Markets to conduct a beauty
pageant that included 47 potential buyers, including Steel, in
which Emerson emerged as the buyer. Calls to Steel were not
AIN073007
7/26/07
4:22 PM
Page 9
July 30, 2007
Market Focus
Hedge Fund Managers Well
Represented In Art List
Henry Kravis. Kravis is on the board of the Met and even has a
wing of the museum named after him.
Several well-known hedge fund managers are among the top art
collectors in the world, according to a recent list compiled by
ARTnews. The magazine’s list of the 200 Top Collectors includes
seven hedge fund managers and four private equity barons. The
hedge fund notables include SAC Capital Advisors founder
Steven Cohen, whose art prowess and wide-open wallet are wellknown. Cohen famously purchased a modern work by Damien
Hirst that had a dead shark preserved in a tank. The shark
eventually started to rot, causing the artist to fix up the piece,
which Cohen is lending to the Metropolitan Museum.
Also on the list is Daniel Loeb of Third Point, which
describes his tastes as postwar and contemporary. That
description was appropriate when AIN profiled his office three
years ago, finding a photograph by legendary photographer
Cindy Sherman (iialternatives.com, 7/18/04) featuring the artist
posing in distinctively creepy clown make-up.
Other notables on the list, which does not rank the collectors,
include Michael Steinhardt, Ken Griffin, Leon Black and
Hedge Fund-Backed SPACS Debut
Blank check companies backed by GSC Group and Terrapin
Partners have debuted, raising a combined $621 million. GSC
Acquisition, the firm’s foray into special purpose acquisition
companies, pulled in $207 million. The firm had been planning
to raise a war chest of $194 million (AIN, 2/5), but was able to
increase the pricing.
Terrapin’s Aldabra 2 Acquisition is the second blank check
company for the firm. It raised $414 million, which like GSC,
will be used to purchase a company in any industry. Terrapin’s
first SPAC, Aldabra Acquisition, completed a merger in
December with Great Lakes Dredge & Dock Corp.
GSC, which manages $18 billion in alternative investments,
was founded by Alfred Exkert, an ex-Goldman Sachs partner
who started the bank’s leveraged buyout department. Terrapin
and related entities are run by Nathan Leight and manage private
equity and hedge funds. Calls to GSC and Aldabra were not
Data Zone
FIXED INCOME HEDGE FUNDS
Data provided by Eurekahedge.
Fund
Spinnaker Global Opportunity Fund
MKP Credit
Aramid Entertainment Fund
Growth Management
RAB European High Yield Fund (A Share)
Cedarview Opportunities I
LGIM High Yield Alpha Fund
Local Currency Opportunity Fund
AlphaBridge Fixed Income Fund
Nayan Capital Fund
Hillside Apex Segregated Portfolio (USD)
III Relative Value Credit Strategies Fund
ILEX Credit Fund - EUR Class
Pequot Corporate Opportunities Offshore Fund
Morley G7 Fixed Income Fund (EUR)
ADI Credit Arbitrage Fund
Manager
Spinnaker Capital (Brazil)
MKP Capital Management
Aramid Capital Partners
GML International
RAB Capital
Cedarview
LGIM High Yield Alpha Fund
The Rohatyn Group
AlphaBridge Capital Management
Próxima Alfa Investments (USA)
Thames River Capital
III Offshore Advisors
ILEX Asset Management (UK)
Pequot Capital Management
Morley Fund Management
ADI SA
Region
Global
North America
Global
Global
Europe
North America
Global
Global
North America
North America
Emerging Markets
North America
Europe
North America
Europe
Europe
June ‘07
Return
1.50
2.82
2.24
1.54
0.15
0.67
0.12
-0.10
2.29
-2.06
0.02
0.70
-0.94
0.20
0.43
0.23
‘07 YTD
return
14.32
13.93
12.31
10.90
9.13
9.11
8.70
7.91
7.45
6.98
6.96
6.37
6.14
5.72
3.77
2.42
2006
return
20.25
6.06
1.54
18.53
11.62
17.30
10.02
16.43
8.04
0.66
10.15
9.34
8.01
7.54
13.75
3.39
Annualised
Std Deviation
6.81
3.86
3.25
6.64
5.83
2.55
3.84
6.65
2.32
4.31
9.01
3.72
6.64
1.68
2.08
0.48
Sharpe
Ratio
3.18
2.38
4.66
2.20
1.41
3.81
2.05
1.70
2.26
0.25
1.08
1.39
0.55
1.32
1.85
-1.92
AuM
(US$ Mln)
2698.22
142
93.15
362.21
63
550
43.42
363
150
392
1161
458
146
209
633
676
Eurekahedge Commentary
Fixed income hedge funds had a relatively flat month in June (-0.1%). This was partly because gains from convertible valuations, from an increase in volatility, were offset by widening credit
spreads. In the underlying markets, pressure from high interest rates, resurfacing problems in the sub-prime mortgage markets in the US and surging bond yields (which touched 5.3% during
the month), kept the market sentiment weak. The expectations of a rate hike, globally, brought about a steepening in the yield curve. In terms of regional performance, European funds registered the sharpest drop (-1.6%) as interest rate hikes that were already factored into managers’ portfolios did not materialise. Managers allocation to North America and the emerging markets, on the other hand, were only marginally up or down (-0.2% and +0.2% respectively), with value trading in the currency and interest rate markets contributing to gains.
9
AIN073007
7/26/07
4:22 PM
Page 10
July 30, 2007
Data Zone (cont’d)
MANDATE SCOREBOARD
The table below shows new allocation commitments gained by alternative managers year-to-date through July 25. To
report mandates contact Louis Pope at 212-224-3211 or [email protected].
2007 Tally
Firms Hired
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
17
18
19
20
21
22
23
24
26
27
28
29
30
31
33
38
39
40
41
42
43
44
48
49
50
51
52
53
54
Carlyle Group
Lehman Brothers
Hellman & Friedman
Pantheon Ventures
Apax Partners
Bridgewater Associates
Avenue Capital Partners
OCM Opportunity Fund
AlpInvest Partners
The Blackstone Group
CVC European Equity Partners
CVC Capital Partners
Grosvenor Capital Management
Gottex Asset Management
Brigade Capital Management
Crestline Investors
New Mountain Capital
AQR Capital Management
EnTrust Capital
Silver Lake Partners
Coller International Partners
MatlinPatterson Asset Management
Kohlberg Kravis Roberts & Co.
Access Capital
Pacific Corporate Group
Lexington Partners
Morgan Stanley/Frontpoint Partners
GMO
Partners Group
Texas Pacific Group
K2 Advisors
Aquiline Holdings
Baring Asset Management
Fortress Investment Group
Grove Street Advisors
KRG Capital
Platinum Equity
Goldman Sachs Asset Management
Mariner Investment Group
Providence Equity Partners
Fauchier Partners
Kelso Investment Associates
Gores Group
D.E. Shaw
MHR Institutional Partners
PIMCO
ValueAct Capital Management
BlackRock
Thomas H. Lee Partners
Capital International
TCW Group
Energy Capital Partners
AXA Rosenberg
Green Equity Investors
Week of July. 23
Wins
10
9
7
8
6
3
6
7
1
10
2
1
4
6
1
1
5
3
26
5
2
7
4
1
1
2
6
4
4
4
2
2
1
1
1
1
1
5
2
5
3
3
3
1
1
1
1
3
4
3
2
1
1
3
Total* Client
1241
1231
1110
950
870
850
785
768
676
601
551
541
540
538
500
500
495
469
463
450
450
445
440
400
400
380
379
379
369
350
340
300
300
300
300
300
300
297
285
270
265
255
250
250
250
250
250
246
245
245
220
220
212
205
Asset Type
Detroit General Retirement System
Hedge Funds/Portable Alpha
30
Teachers’ Retirement System of Louisiana
Private Equity/Buyout
100
Teachers’ Retirement System of Louisiana
Private Equity/Buyout
50
North Dakota State Investment Board
Private Equity
35
*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].
10
Amount*
AIN073007
7/26/07
4:22 PM
Page 11
July 30, 2007
AFRICA-FOCUSED
(continued from page 1)
by the time of launch early next year,
according to CEO Thomas Gibian.
“[The] Chinese are more interested at the
moment,” explained COO Hurley Doddy,
adding that Chinese investors have only
recently begun to diversify outside their own
country and are particularly keen on Africa,
Thomas Gibian
which many see as the next big opportunity
in emerging markets. Africa’s strength is primarily due to lower
debt, strong currencies and commodity prices and an agreement
with the European Union for increasing its exporting business.
“For us the runway is quite long,” said Gibian.
Current investors in ECP’s funds include African institutions
and banks, European pensions, U.S.
institutional investors such as AIG Global
Investment Group and Middle Eastern
family offices, but none from Asia.
The firm has made investments in 30
African nations. Large investments include
MTN Cote d, a telecom company in the
Hurley Doddy
Ivory Coast, Mineral Deposits Limited, a
metal and mining firm in Senegal, Intercontinental Bank in
Nigeria, Artumas Group, a natural resources and gas company
in Tanzania and Mozambique, and Notore Chemical
Industries, a fertilizer plant in Nigeria.
Prior to joining the firm in 2000, Doddy spent 14 years on
the derivatives and trading desk at Solomon Brothers. Before
joining EMP, Gibian worked at Goldman Sachs from 19872000, his last position as executive director and co-head of the
structured project finance Asian group.
—Suzy Kenly
PENTIUM PLOTS
assets, leasing them to companies at a fixed monthly rate, said
Zaragoza. The fund is likely to employ a soft
lockup of six months and Pentium will seek
long-term investors, but redemptions would
be allowed for a 2-3% exit fee, he said. “We
always have a reserve in the funds. If someone
wants out quickly, we’ll buy [their position]
because we believe in our funds.”
Vicente Zaragoza
The fund will aim to make around 2% a
month from leasing and will be 2:1 leveraged. It will charge
2/20 fees and the investment minimum will be either
€100 million or €250 million, though Zaragoza said he will
seek larger investments.
—Robert Murray
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B400101
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,
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
Options for payment:
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18
COPYRIGHT NOTICE: No
part of this publication may
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Investor’s prior written
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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
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
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.
breaking news and updates.
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AIN073007
7/26/07
4:22 PM
Page 12
CITADEL VETS
Living On The Hedge…
Lynch, has joined Abax as president.
Hsu and Yong are probably the biggest Citadel names to
launch their own fund since Alex Litowitz formed Magnetar
Financial with $2 billion in 2005. The Magnetar Capital Fund
has since grown to $3.5 billion and has returned 15.3% this year
through June 30.
—Elizabeth Locke
PERELLA WEINBERG
equities hedge fund. He was previously a
managing director at
North Sound Capital.
Perella Weinberg’s is
not the first hedge fund to
use the Aileron name,
which refers to a control
Joseph Perella
surface on an aircraft
wing. Aileron Capital Fund, a quant fund
Peter Weinberg
managed by William Guttman and marketed
by Lehman Brothers, was shut down after a string of poor
performance late last year.
—Nathaniel Baker
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Go online and take advantage of web access to
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contact us at [email protected]
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12
July 30, 2007
An occasional column by Logan Short,
an astute industry observer. He can be
reached at [email protected].
It’s getting ugly in credit markets, as contagion
from the subprime meltdown begins to take hold.
They’ll probably find a way to blame hedge funds for
this, but let me first point out all the Wall Street bigwigs who assured us
this wouldn’t happen. Take Merrill Lynch CEO Stanley O’Neal, who on
June 27 said the subprime mess was “reasonably well contained.”
Lehman Brothers CFO Chris O’Meara took a strikingly similar position. “We continue to believe that subprime market challenges are and
will continue to be reasonably contained,” he said on June 12. Not to be
outdone, Bear Stearns CFO Sam Molinaro on June 14 professed the
subprime mess “hasn’t spilled into other parts of the market.” That same
day Goldman Sachs CFO David Viniar professed “there’s very little
effect on other credit markets.” Sure, guys. Tell that everyone who
bought in to the LCDX North America index of loan credit default swaps,
which launched on May 22. The index tracks credit default contracts
written on 100 syndicated secured first lien loans, which is about as safe
as subprime is risky (if subprime is a Sunni neighborhood in Baghdad,
then the LCDX is Greenwich, Conn.). At close of its first day of trading,
May 22, the spread on the LCDX was 103.9 basis points. In mid-June,
right about the time most of these geniuses were giving us these upbeat
forecasts, it was around 115 bps. On June 29, the last trading day of the
month, 180.7 bps. On July 24, 274 bps. So things are seriously awry in
credit markets. Are equities next? Last week’s selloff in the Dow indicates that may already be happening. Now where are all those shortonly hedge funds when we need them?
Quote Of The Week
“A lot of guys have started up recently, while there’s been a raging
bull market. They’ve got no experience of bear markets.”—Louis
Gargour, founder of LNG Capital and ex-director of fixed income
at RAB Capital, slamming so-called hedge funds that have been hit by
the ongoing turmoil in the credit markets (see story, page 7).
One Year Ago In Alternative Investment News
Harcourt Investing Consulting, the then-$4 billion Swiss fund
of funds firm, made its first-ever push for U.S. assets and
separately launched an onshore fund of funds for Canadian
investors. [Harcourt has continued its expansion across the
globe. In June, the firm made plans to open an office in Bahrain
as part of a push for Middle Eastern investors (iialternatives.com,
6/29). Earlier this year, the firm also launched a Latin Americafocused fund of funds.]

citadel vets form hong kong firm africa

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