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AIN102405 10/20/05 6:15 PM Page 1 Youth Movement OCTOBER 24, 2005 VOL. VI, NO. 42 HFR READIES FUND OF EARLYSTAGE MANAGERS Steinhardt Pulls The Plug Ex-JPMorgan credit guru John Steinhardt, who departed the firm one year ago to form Spectrum Investment Group, has apparently called off the launch of his fund. See story, page six HFR Asset Management, the fund of hedge funds giant with over $4 billion under management, will launch a fund of emerging managers on Dec. 1. It will debut with around $500 million and will allocate to 20-25 managers with less than two years’ track record, said John Godden, managing director in London. The strategy will seek to (continued on page 14) U.S. News Pirate To Launch Activist Fund Azimuth Seeks FoF Partners Highbridge, KBC Take Registration Plunge Energy Firm Taps Goldman Analyst Institutions Cut Converts Exposure 4 4 4 5 6 European News Stenham Preps Third Macro Fund Eden Rock Makes Redemptions Aspect Seeks Three Researchers Titanium To Bolster Recently-Acquired Macro Team FRM Plans Aggressive FoF 8 10 10 Departments Search & Hire Directory Calendar 13 15 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 2005 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. John Bu, a high-ranking veteran of various Goldman Sachs businesses, will launch the Akana Capital Fund with $500 million on Nov. 1. The offering will follow a long/short strategy and invest mainly in Asian equities, according to offering documents. Bu’s New York-based firm, Akana Capital, was opened earlier this year. Calls to Akana were not returned by press time. At Goldman, Bu was a member of the principle strategies steering committee, head of its pan-Asian portfolio and co-head of both the global relative-value and Japan portfolios. Previously, he was managing director and principal in one of Goldman’s private equity groups (continued on page 15) 7 8 8 Under The Hood Idaho Firm Profits From Utility Stocks ANOTHER GOLDMAN STAR SETS UP FUND DKR LIQUIDATING STRUCTURED CREDIT FUND $4.2 billion DKR Capital is liquidating its $100 million DKR Varick Fund. The firm hopes to complete liquidation by year-end, at which point its five-person structured credit team will depart. Concerns about performance—the fund is down about 7% since it launched this March—drove the decision. DKR created the structured credit team, led by Jawahar Chirimar, head of credit trading in Asia for Lehman Brothers, earlier this year to launch the fund (AIN, 2/28). Varick has underperformed compared to industry benchmarks. The CSFB/Tremont Hedge (continued on page 14) Oslo, Texas? ENRON VET PREPS COMMODITIES PUSH AT NORWEGIAN I-BANK Oslo-based investment banking house Pareto is making a push into commodities funds, an effort spearheaded by Thor Lien, formerly head of Enron’s Nordic unit. The firm has just started trading a Nordic power strategy and is planning to launch a Cayman Islandsdomiciled fund shortly, said Lien. Lien helped start Enron’s efforts in the Nordic market and ran Enron Nordic Energy until the Houston-based parent company’s highly-publicized demise. American Electric Power (continued on page 15) Check www.iialternatives.com during the week for breaking news and updates. AIN102405 10/20/05 6:14 PM Page 2 Alternative Investment News www.iialternatives.com October 24, 2005 At Press Time Threadneedle Ponders Ops Shake-Up EDITORIAL TOM LAMONT Editor London-based asset management giant Threadneedle Investments, which manages $1.8 billion in hedge funds, is looking into possible changes that could be made to the infrastructure of its hedge fund business. An official at the firm said Threadneedle is considering ways to bring its hedge fund sales, investment and product development teams closer together. “It’s a question of capacity and how the team should grow.” The official declined to specify what options are being considered but stated that no hires have been made. Another Threadneedle employee told AIN the firm is considering creating a new role for a head of hedge funds. This individual would unite the hedge fund business under Lorin Gresser, head of alternative investments. Gresser was not available to comment at press time and Denis Tumbult, head of marketing, did not immediately return a call. STEVE MURRAY Deputy Editor DOUGLAS CUBBERLEY Executive Editor (212) 224-3318 NATHANIEL E. BAKER Managing Editor (212) 224-3648 MARK FARO Senior Reporter (973) 706-5307 ROBERT MURRAY Senior Reporter (44-20) 7303-1705 JENNIFER MCCANDLESS Reporter (212) 224-3615 ELINOR COMLAY (44-20) 7303-1738, VENILIA BATISTA (44-20) 7303-1718 London Bureau Chiefs September Swoon Winton Capital Suffers Performance Dip STANLEY WILSON Washington Bureau Chief (202) 393-0728 PUBLISHING MARK FORTUNE Publisher (212) 224-3129 MARA READ Senior Marketing Manager (212) 224-3524 CHARLOTTE WILTSHIRE Associate Marketing Manager (212) 224-3421 JAMES MERRINGTON European Marketing Manager [London] (44-20) 7779-8023 VINCENT YESENOSKY Senior Fulfillment Manager SUBSCRIPTIONS/ ELECTRONIC LICENSES One year - $2,495 (in Canada add $30 postage, others outside U.S. add $75). DAN LALOR Director of Sales (212) 224-3045 JOVITA WALKER Account Executive (212) 224-3824 NATALIE MAIR Account Executive [London] (44-20) 7779-8076 London-based CTA Winton Capital Management dropped an estimated 6.5% last month. A call to David Harding, principal, was not returned but an insider said the drop in performance was due in part to hurricanes Katrina and Rita. The news was not all bad, however, as the fund was added to the CSFB/Tremont Investable Hedge Fund Index on strength of its assets under management, which last month grew by $90 million to $3.59 billion. The index consists of the 60 largest open hedge funds not domiciled in the United States. It is rebalanced bi-annually, with the most recent update coming on Oct. 1. LYNETTE STOCK, DEBORAH ZAKEN Managers CHRISTOPHER BROWN Chief Executive Officer Chicago Union Makes FoF Investments MICHELLE TOM, ILIJA MILADINOV, MELISSA ENSMINGER, BRIAN STONE, JAMES BAMBARA Associates DAVID E. ANTIN Chief Operating Officer Mariner Investment Group, Arden Asset Management, EnTrust Capital and K2 Advisors each received $20 million from the Laborers Pension Fund of Chicago last week. Investing in funds of hedge funds should reduce the plan’s volatility, said Fund Administrator James Jorgensen. Marco Consulting Group recommended all the hires. “We looked at all the funds of funds and saw these four had diversity, and then we looked to see if there was overlap between the four funds and saw that their holdings were also different,” said Jorgensen. Separately, the Teamsters, Local #730 in Washington, D.C., has invited three hedge fund-of-funds firms to present at its Dec. 20 meeting vying for a potential $20 million investment. The $250 million fund selected Meridian Capital Partners, Ivy Asset Management and Arden from a list of eight firms, said Ritchie Brooks, v.p. The meeting will not necessarily lead to an investment, however. “We just want to hear what they have to say,” Brooks added. MATTHEW TREMBLAY Hong Kong Bureau Chief (852) 2912-8097 JANA BRENNING, KIERON BLACK Sketch Artists PRODUCTION DANY PEÑA Director JENNY LO Web Production & Design Manager Tell Us What You Think! 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 Nathaniel Baker can be reached at 212-224-3648 or [email protected]. 2 Copying prohibited without the permission of the publisher. MARIA JODICE Advertising Production Manager (212) 224-3267 ADVERTISING JONATHAN WRIGHT Advertising Director (212) 224-3566 [email protected] PAT BERTUCCI, MAGGIE DIAZ Associate Publishers SABEENA NAYYAR Account Executive [Hong Kong] (852) 2842-6929 REPRINTS DEWEY PALMIERI Reprint & Permission Manager (212) 224-3675 [email protected] CORPORATE ROBERT TONCHUK Director/Central Operations & Fulfillment 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 6950 E-mail: [email protected] Editorial Offices: 225 Park Avenue South, New York, NY 10003. Tel: 1-212-224-3318 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 ©2005 Institutional Investor, Inc. ISSN# 1544-7596 Copying prohibited without the permission of the Publisher. Project2 8/29/05 3:41 PM Page 1 CME® FX What it means to be a A leader isn’t merely first. A leader carves the path all others follow. CME invented currency futures, but that was just the beginning. Now, CME FX products remain in the lead with more than $45 billion each day in liquidity. 90% of it trades electronically around the clock, from participants all over the globe. Discover how true leadership can change your world. cme.com CME, the globe logo, and Chicago Mercantile Exchange, are trademarks of CME. © Copyright 2005 CME. All rights reserved. leader. AIN102405 10/20/05 6:07 PM Page 4 Alternative Investment News www.iialternatives.com October 24, 2005 U.S. News Pirate Preps Activist Fund Pirate Capital, the Norwalk, Conn.based event-driven firm run by former Goldman Sachs distressed debt maven Thomas Hudson, is planning to roll out an activist fund in January. The Jolly Roger Activist Fund, slated to launch with $50 million, will be made up of activist positions in the firm’s existing funds, said Andrew Stotland, director of sales and marketing. With more capital available, the $980 million firm will then have an increased ability to make additional activist investments, he added. Specifically, the new fund will feature eight-12 of the firm’s 50 total positions. These include an investment in Walter Industries. The company recently completed an acquisition of Mueller Water Products, a supplier of flow control products for the water infrastructure industry. Pirate officials met with Walter management last week and proposed several initiatives to increase shareholder value, including selling its finance and homebuilding subsidiaries and conducting an initial public offering of 20% of Mueller. The new fund will have a $2 million investment minimum, a 2% management fee and 20% performance fee. There will be a soft lockup provision of two years, whereby investors who redeem in the first year pay a 10% fee and those exiting in the second year must pony up 5%. Highbridge, KBC Bite Registration Bullet New York’s Highbridge Capital Management and London’s KBC Alternative Investment Management are the latest large hedge fund firms to register with the Securities and Exchange Commission ahead of next February’s deadline. They join York Capital Management, Och-Ziff Capital Management, Campbell & Co., Satellite Asset Management and Caxton Associates among large hedge fund managers that have registered since the SEC rule went into effect one year ago. The rule requires hedge fund managers with more than 14 U.S. clients to register as investment advisers by Feb. 1, unless the firms have lockups of two years or more for new investors. Some of the biggest hedge fund firms, including GLG Partners, Citadel Investment Group and Tudor Investment Corp., have not yet taken this step. Calls to Highbridge and KBC did not comment by press time. 4 Pa. Convert Arb Manager Branches Out Bala Cynwyd, Pa.-based RG Capital Management, which manages roughly $500 million in convertible arbitrage and related strategies, is expanding its range. The firm tapped Troy Hottenstein from UBS to work on new event-driven strategies. Hottenstein said he would be focusing on special situation and merger arbitrage strategies, as his background is in those areas. He was head of an event-driven desk at UBS that dealt with special situations and merger arbitrage. Hottenstein declined to elaborate regarding the firm’s rationale for brining him on board, but said it was not a result of convertible arbitrage generally being in a rut (see related story, page 6). A UBS sposkesoman declined to comment. Azimuth Seeks Joint Ventures New York-based fund of hedge funds firm Azimuth Trust Company is seeking joint venture partners. The firm, which manages roughly $250 million, is seeking other funds of funds as partners, said Ezra Zask, who was recently hired to head business development. These partnerships could involve Azimuth conducting asset-gathering services for another fund of funds. The firm is also in talks with some parties, including an insurance company and a major private bank that are interested in using Azimuth’s manager database to create their own funds of funds, he added. Azimuth feels the fund of funds universe is overly crowded and will eventually contract. While some institutions have purchased fund of funds firms, there have been few funds of funds that have acquired their own brethren. This is because the value of a fund of funds lies in its systems and operations, which would be duplicated by a firm already in the space, said Zask. Therefore, it makes sense for funds of funds to seek partnership agreements with other firms rather than to acquire firms or launch similar products in a crowded market, he explained. Zask was recently brought onboard from Ibbotson Associates, where he ran a fund of funds advisory service. He is looking to increase the firm’s assets to around $500 million in the short-term, with a longer-term goal of $1 billion in two years’ time. Azimuth initially concentrated on private equity and hedge funds, but at the beginning of this year new CEO Terrance Meehan instituted a fund of hedge funds focus, said Zask. The firm’s other senior members include Todd Petzel, former cio of the Common Fund, and Bob Litzenberger, former global risk manager for Goldman Sachs. 4 s s s ' 3 Copying prohibited without the permission of the publisher. W AIN102405 10/20/05 6:07 PM Page 5 October 24, 2005 www.iialternatives.com San Fran Firm Launches Metals Fund San Francisco-based Marathon Resources Investments has rolled out a long/short equity fund that focuses on precious metals. The firm already manages a $25 million long/short natural resources strategy with roughly 30% exposure to precious metals. The nascent offering, which so far has $3 million in assets, was launched to take advantage of current gold market conditions, explained Robert Mullin, general partner. There has been a prolonged period where gold prices have increased, while gold stocks have lost value, something that has not happened since 1986, said Mullin. This means there are plenty of value plays in early-stage mining companies that can be purchased for deep discounts, he explained. There is also a “big-picture” rationale, as the world’s financial system has been issuing billions in debt traded over thin amounts of equity. This is inherently dangerous, because it has only been supported by a bull market of confidence, said Mullin. If the confidence wanes, gold will be the asset class that wins, he added. The fund has a $500,000 investment minimum with a 1.5% management fee and a 20% performance fee. There is a one-year lockup provision. The vehicle’s level of volatility does not make it as attractive to funds of funds, and the firm is instead pitching it mainly to high-net-worth individuals and family offices, said Mullin. Since gold investments are designed to hedge against Alternative Investment News financial events, investors do not want the gold investment itself overly hedged, he explained. N.Y. Energy Shop Hires Goldman Analyst Alerian Capital Management, an energy Master Limited Partnership-focused hedge fund firm, has hired Kenny Feng, an analyst at Goldman Sachs’ energy and power equity research group. Feng also covered the gas utilities sector at Goldman. He joined the firm at the beginning of the month, said Gabriel Hammond, founder. Feng’s position was added because the firm believes there will continue to be a tremendous amount of acquisition activity in the MLP space that will necessitate private investments in public equities, said Hammond. “We’re also seeing an increase in the number of non-traditional energy transportation assets entering the MLP structure…and need to increase the scope of our coverage,” Hammond added. The firm is seeking to hire additional analysts as assets grow and the scope of the assets class increases. Feng said he decided to join Alerian because he believes there is a great opportunity to build a long-term business in the asset class. Andrea Raphael, a spokeswoman for Goldman, did not return calls by press time. THANNUALEVENT 2%30/.3%&/2(EDGE&UNDS7ORLD:àRICH &AXTO .OVEMBER0ARK(YATT(OTEL:àRICH3WITZERLAND 4HE3WISSEVENTFORHEDGEFUNDMANAGERSANDINVESTORS s s s (EARFORMINmUENTIAL3WISSMARKETLEADERSINCLUDINGSINGLEHEDGEFUNDSFUNDSOFHEDGEFUNDS ANDTOPINSTITUTIONALINVESTORS 3ECUREPROlTABLEPARTNERSHIPSANDALLIANCESIN3WITZERLANDnTHEHEARTBEATOFPRIVATEBANKINGAND %UROPESLEADINGHEDGEFUNDSINVESTMENTMARKET &INDOUTWHICHCRITICALSUCCESSFACTORSAREREQUIREDTOMEETTHEEXPECTATIONSOFINCREASINGLY SOPHISTICATED3WISSINVESTORS 2%')34%2./7 #ALLFAXORBOOKONLINEAT WWWHEDGEFUNDSWORLDCOMZURICH : 9ES)AMINTERESTEDINATTENDINGTHECONFERENCE 0LEASESENDMETHECONFERENCEAGENDA : 9ES)AMINTERESTEDINSPONSORSHIPANDEXHIBITION OPPORTUNITIESPLEASECONTACTME .AME *OB TITLE #OMPANY !DDRESS 'OLDSPONSORS 4EL &AX 3ILVERSPONSORS "RONZESPONSOR /RGANISEDBY %MAIL %VENTCODE))3 WWWHEDGEFUNDSWORLDCOM:URICH AIN102405 10/20/05 6:07 PM Page 6 Alternative Investment News www.iialternatives.com Golden State Shop Adds Analyst Barrington Wilshire, a hedge fund firm in Santa Monica, Calif., has hired Kevin McNamara as biotechnology analyst. He joins from M.S. Howells, broker/dealer headquartered in Scottsdale, Ariz. McNamara will not be relocating to sunny California however; he joined Barrington in its Westport, Conn. office, the same location as his old position. McNamara and Barrington officials did not return calls. SEC-Registered Firms Advised To Review Prime Broker Relationships Hedge fund managers should review relationships with their prime brokers because it is one of the things that comes up in Securities and Exchange Commission inspections, advised Thomas Biolsi, a managing director at PricewaterhouseCoopers in New York. Biolsi told a Practising Law Institute forum that SEC examiners are concerned about the possible conflicts of interest that can arise in those relationships. In a recent inspection, for example, an examiner interviewed the head of operations and asked for a list of failed trades. The firm reported a significant number of failed trades with one prime broker. The head of operations explained that the prime broker provided very poor execution of one asset class, but the firm would not dump them because they had helped the firm get started and had a long-standing relationship. Biolsi did not say what, if any action was taken against the firm. Institutions Continue Exodus From Converts As convertible arbitrage strategies continue to perform poorly, institutions are eliminating or reducing their exposure to the strategy. During the Mid-Atlantic Hedge Fund Association’s Asset Allocation Program in Philadelphia last Tuesday, Stan Kowalewski, head of the fund of funds group for $4 billion Columbia Partners Investment Management, said his firm has pulled out of convertible arbitrage due to poor performance. However, Kowalewski noted his firm could move back into the space in the next six to 12 months if market conditions and returns improve. Don Stracke, director of marketing for Bala Cynwyd, Pa.based fund of funds Attalus Capital, said the firm has also reduced its exposure to converts. Greg Dyra, assistant treasurer for Vanderbilt University’s endowment, said the university has also eliminated its exposure to convertibles. Convertible arbitrage has been the poorest performing strategy tracked by 6 October 24, 2005 the CSFB/Tremont Hedge Fund Index. Converts are down 2.99% year-to-date. D.O.A.? Fixed-Income Honcho’s Fund May Not Happen John Steinhardt, the former head of credit markets at JPMorgan’s fixed-income group that departed to form Spectrum Investment Group last October, has apparently put his new firm’s maiden fund launch on ice. Industry insiders, one of whom invested in the fund, said the launch was called off after Steinhardt’s capital-raising efforts fell short. Steinhardt did not return calls. The multi-strategy fixed-income fund was slated to invest in structured products, asset-backed securities, leveraged fixedincome and correlation trading (AIN, 7/31). Calls to JPMorgan’s press office were not returned by press time. Blackstone Snags Arden Sales Big The Blackstone Group has hired Edwin Conway as a managing director at its fund of funds group Blackstone Alternative Asset Management. Conway joined the $9.3 billion firm from Arden Asset Management last Monday. He reports to Tom Hill, senior managing director. Calls to Blackstone were referred to a spokeswoman, who declined to comment. Conway spent two years at Arden, where he reported to Stephen Cordy, managing director of client services. Previously, Conway did a stint at Credit Suisse Asset Management. “We wish him the best,” said Jonathan Gasthalter, spokesman for Arden, declining further comment. San Diego Ponders Adding To Hedge Fund Roster The San Diego County Employees Retirement Association will likely hire more hedge funds managers if a plan to incorporate portable alpha strategies goes through. The $6.3 billion fund will spend the next 18 months investigating if a portion of its $1.89 billion fixed-income exposure should be moved to the strategy, said David Deutsch, cio. It is unlikely that incumbent bond managers would be terminated, but they may have their mandates reduced or changed, Deutsch continued. The plan currently uses TCW for mortgage-backed securities, PIMCO for global bonds and TIPS, Ashmore Investment Management for emerging market debt, W.R. Huff Asset Management and Oaktree Capital Management for high-yield, Zazove Associates for Copying prohibited without the permission of the publisher. 14 P T • • • AIN102405 10/20/05 6:07 PM Page 7 October 24, 2005 www.iialternatives.com high-yield convertibles, Nicholas-Applegate Capital Management for convertibles and Colchester Global Investors for global bonds. Additionally, the fund is scouting for private equity partnerships to raise its 3.6% exposure to the target 5%. Rocaton Investment Advisors is the consultant for the alpha engine and is also the plan’s general consultant. Cambridge Associates advises on private equity. European News Liongate Taps FRM Client Servicing Head Liongate Capital Management, the $170 million London-based fund of funds firm that topped performance databases last year, has hired Melanie Herbert as head of investor relations. She joins from fund of funds giant Financial Risk Management, where she held the same role. Herbert is due Randall Dillard to join Liongate at the end of the month, said Randall Dillard, partner. This is a newly-created role and will create more time for Dillard and Jeff Holland, partner, to focus Alternative Investment News on the investment process, explained Dillard. Herbert, who has already left FRM, was on vacation and could not be reached. John Capaldi, managing director at FRM, declined to elaborate on Herbert’s departure. Stenham Readies Global Macro FoF Stenham Advisors, the $1.8 billion fund of funds firm, will launch its third global macro fund of funds on Dec. 1. The firm’s existing pair of macro funds of funds hold $210 million between them and are “pretty much closed”, with most underlying managers refusing to accept capital, explained Harry Wulfsohn, director in London. “We’re very optimistic about the macro space over the next 12-18 months.” The new fund, as yet unnamed, will launch with around $40 million, continued Wulfsohn. It will be a concentrated portfolio, investing in just seven global macro managers. The firm is already invested with three of these; the remaining four are new investments, he said. Stenham plans to grow the fund of funds steadily, to a few hundred million dollars, he added. The new macro offering will charge a 2% performance fee and a 10% performance fee, said Wulfsohn. It will have a relatively small investment minimum, at around $25,000. Whereas Stenham’s other funds are domiciled in the British Virgin Islands, 14th Annual Public Fund Boards Forum SM December 4-7, 2005 * The Westin St. Francis * San Francisco, CA The largest gathering of public fund boards in North America featuring: • Topics addressing all concerns of Public Fund Boards: pension fund liabilities, board governance, investment issues, and working with managers and consultants • Over 65 Expert speakers from leading consultants and financial institutions • Case Studies featuring real-life examples of how Public Fund Boards are working to close the funding gap • Extra day of sessions included in registration for Public Fund Board representatives • 35+ sessions planned, including 16 different breakout sessions to choose from • 14 Hours of Networking opportunities including the famous Trustees’ Tailgate THE ANNUAL TRUSTEES’ TAILGATESM - 700+ attend each year Join your friends and colleagues for the most famous networking event in the Public Fund community! Enjoy food, drinks and the football game courtesy of our generous sponsors Register Today! www.publicfund.net When registering, please mention discount code XUIINA AIN102405 10/20/05 6:07 PM Page 8 Alternative Investment News www.iialternatives.com the firm is looking at Guernsey, where new legislation means it could be more efficient to run a fund, he said. Attica Makes Push To Grow FoF Attica Alternative Investments, the London-based fund of funds firm, is making a marketing push for a multi-strategy fund of funds. The Attica Alternative Alpha Fund, which is devoted to new and niche strategies, has returned 4.2% in its first three months, said Larry Jones, senior investment manager. Attica is marketing the fund via one-to-one meetings; most investors are institutions and high-net-worth individuals, Jones added. Although there are no specific capacity constraints on the fund at present, the firm plans to soft-close it when it reaches $500 million. The firm hopes to grow the fund to $250 million within a year, and to the $500 million mark within two years, he continued. The fund has grown to $70 million from $62 million in July (iialternatives.com, 7/1). The fund of funds has an unusual fee structure, charging a 20% performance fee with no management fee. Jones said this is a sign of the firm’s confidence in the strategy, and added that he hopes this will help the push for assets. “Investors like that expression of confidence. They like to save on fees because they’re an issue for the market,” he observed. Aspect Plans Three Research Hires London-based Aspect Capital is seeking to make three additional research hires before the end of the year. The firm, which manages $2.5 billion, employs 110 people, 51 of whom are in the research team, said Anthony Todd, ceo. It is “well on the way” to filling two of the spots, he added. Todd Anthony Todd declined to specify the areas of expertise for which the firm is hiring. Aspect has already made eight research hires this year. Although it has plans to roll out new strategies further down the road, its focus is on managing its existing funds and enhancing its infrastructure in preparation for further asset growth, continued Todd. The firm is in no hurry to roll out new funds— its most recent launch, a Japan long/short offering, was two-anda-half years ago—but “we have a clear pipeline of research projects for at least a year,” he added. The firm has had longstanding plans to launch a U.S. long/short fund (iialternatives.com, 4/6/2004) and a hedge fund seeding program (iialternatives.com, 4/4/2004). These are still both very much in the cards, assured Todd. U.S. long/short is “a clear contender, but we’ll only launch programs when the timing is right for the business,” he said, adding that the fund 8 October 24, 2005 could launch next year, or possibly wait until 2007. Aspect is still “in the build phase” for the seeding program and no visible progress will be made until September 2006, he stated. More Acquisitions Likely Titanium Seeks Traders For Acquired Macro Fund Titanium Capital, the $500 million London-based hedge fund firm, is in the process of hiring two or three traders to complete the team for its newly-acquired global macro fund. Last week the firm announced that it has bought the Vizor Macro Fund from Vizor Investment, and that David Morrison, the firm’s director and portfolio manager, has moved to Titanium as a partner to continue managing the fund. The Vizor fund holds under $30 million but has no real capacity constraints, and is expected to become a very significant factor in Titanium’s asset growth, said Philip Manduca, managing director. Roger Courtenay, who handled research at Vizor and was previously a senior economist at the Bank of England, has also joined Titanium. Manduca said the firm is progressing with the hiring process for filling the trader slots, and individuals will be lined up in the next few weeks. Manduca told AIN last year that his firm was planning to acquire boutiques (iialternatives.com, 7/23/2004). Vizor is its first acquisition since purchasing commodity firm Tyrell Green in early 2004. Titanium is continually in talks with other firms but it is difficult to find great talent, acknowledged Manduca. He added that M&A activity will become more prevalent in 2006: many funds of funds have seen redemptions which have put pressure on small hedge fund managers, he observed. Manduca declined to comment on the specifics of the Vizor deal. Eden Rock Shuffles Manager Roster London-based fund of funds firm Eden Rock Capital Management, with $730 million under management, last month redeemed its investments from several underlying managers in its multi-strategy Eden Rock Fund. Edward Horner, managing director, said the redeemed capital was largely reallocated to increase existing positions, but declined to comment on specific managers. Separately, the firm has added new managers to its Solid Rock Fund, which invests in niche and younger hedge funds. The Eden Rock fund redeemed its entire position in a volatility arbitrage fund “as a result of a lack of confidence in the manager’s strategy going forward,” according to an investor document. The firm also removed a merger arbitrage Copying prohibited without the permission of the publisher. qxd not used 10/18/05 12:50 PM Page 1 AIN102405 10/20/05 6:07 PM Page 10 Alternative Investment News www.iialternatives.com fund from the portfolio; this position had already been shrunk earlier this year and the document again cites waning confidence in the strategy. The fund of funds’ exposure to an event-driven, small-cap U.S. equity strategy was reduced. “While we are confident in the abilities of the manager, we feel that the inherent volatility in the strategy warrants a smaller holding,” explains the document. The Eden Rock fund was up 2.12% in September and has returned 7.21% year-to-date. It held 46 managers in September and seven of these made losses. The firm added a new volatility arbitrage manager to the Solid Rock fund at the start of September “and despite low or declining levels of volatility [the manager] managed to return 1.96%,” says the document. At month-end, the firm upped its holding with an emerging market debt fund. This had been closed for some time and “has shown considerable consistency of returns over multiple cycles,” it continues. Solid Rock returned 0.82% last month and is up 6.67% yearto-date. Horner said the firm undertakes ongoing due diligence on a variety of different managers, but declined to elaborate. October 24, 2005 FRM Preps More Aggressive FoF For Q1 Financial Risk Management, the London-based fund of funds mammoth with $12.4 billion under management, will launch a more aggressive alternative to its multi-strategy FRM Diversified fund of hedge funds in the first quarter of 2006. While the existing offering is conservative and takes as little market beta exposure to traditional asset classes as possible, the FRM Strategic fund will be allowed to take more exposure, said John Capaldi, managing director, head of product management. It will predominantly invest in long/short managers in the areas of credit, equity and emerging markets and “will have a positive exposure to riskier assets, but in a measured way,” he added. The fund of funds will invest in 30-40 underlying managers and is expected to launch with $50-100 million. But there are no specific capacity constraints, said Capaldi. The firm’s standard fees, namely 1.25% of assets and 10% of performance, will likely apply. The minimum will be $1 million. The launch will follow those of two new single-strategy funds of funds, focused on CTAs and credit (AIN, 10/17). Under The Hood: AIN’s look inside hedge fund strategies Idaho Energy Fund Rides Utility Stocks To Q3 Gain McOmber Energy Fund, the energy hedge fund run by Boise, Idaho’s Sawtooth Investment Management, posted solid third quarter gains on the strength of its long positions in a basket of utility stocks. The fund returned 5.4% in the quarter and is up 8.41% year-to-date. The utility basket last quarter made up about 66% of the fund’s portfolio, according to the firm’s quarterly letter to shareholders. The basket includes a list of ten-20 names that portfolio manager Roger McOmber described as “stable companies with solid yields and safe dividends.” These include Dominion Resources, Consolidated Edison, Duke Energy and Southern Company. The remaining 34% of the portfolio was split almost evenly between yield arbitrage (18%) and balanced pairs (16%). The pairs strat dropped 2.48% last quarter, while yield arb gained 2.66%. The long strategy was the fund’s most profitable in Q3 as well, returning 6.41%. The firm expects the bullish trend in utility stocks to continue. “Fundamentals continue to look strong for both the power and oil/gas groups,” states the letter. “We expect utility earnings rise 10% in 2005 and to continue at this rate in 2006.” 10 Rising interest rates are not expected to impact the fundamental outlook, “given improved balance sheets and solid cash flow.” The minimum investment is $1 million. Fees are 1% of assets and 20% of performance with a high-water mark. There is a oneyear lockup, after which investors can withdraw capital on a quarterly basis. Banc of America Securities is the prime broker. NOW GET alternative investment news EVERY FRIDAY! Paid subscribers now have access to a PDF of the upcoming Monday’s newsletter on AIN’s Web site every Friday afternoon before 5 p.m. EDT. That’s a 64 hour jump on mail delivery, even when the post office is on time! Read the news online at your desk or print out a copy to read at your leisure over the weekend. Either way, you’ll be getting our breaking news even sooner and starting your week off fully informed! Copying prohibited without the permission of the publisher. CAPAD_inbox_bw_8x10.5_0223 3/4/04 4:51 PM Page 1 Time to sort the in-box... Need to expedite your routing? Here’s the perfect solution. Instant, online news through the Corporate Access Program. Get off the routing list. Get instant, online access of your subscription delivered to your desktop. Breaking news, feature articles, deal opportunities, regulatory insights, and a library filled with financial information. All custom-designed to meet your information needs and your company’s budget. Interested? Call Daniel Lalor at 212-224-3045 or [email protected] INSTITUTIONAL INVESTOR NEWS / 225 PARK AVENUE SOUTH / NEW YORK, NY 10003 WWW.IINEWS.COM Project2 9/21/05 3:23 PM Page 1 )NSTITUTIONAL%XECUTION'ROUP LVWKHOHDGHUIRUH[HFXWLRQSHUIRUPDQFH *UHDW 3HUIRUPDQFH 1<6(7UDGLQJ&RVW %36 Ê £Ê >À>V iÊ Ê Ê ÃÌÌÕÌ>ÊÝiVÕÌÊÀÕ«Ê Ó°È 1$6'$47UDGLQJ&RVW %36 Ñ §Ñ /Å>`iÑ-iÅäViÈÑ ÕÛµÕ Ñ ÛÑ µµÑ7Ó>Ñ Ûyµy Ñ ÛÑ µµÑ7Ó>Ñ ÛÌµÛ Ñ ÕÑ Å>Ñ-Ó>içÑ ÛíµÕ Ñ ÕÑ ÈÓ ÑÈÓÓÞÓ >Ñ-iÅäViÈÑ ÛyµÌ Ñ }Ñ ºÞ`iÓÑ §µÛ Ñ }Ñ ºÞ`iÓÑ ÛÕµ} Ñ yÑ Å`iÑ/Å>`Ñ §µí Ñ yÑ /Å>`iÑ-iÅäViÈÑ ÛíµÌ Ñ ÎÑ *iÅÈÑ §Ìµ Ñ ÎÑ Å`iÑ/Å>`Ñ §nµÛ Ê ÇÊ >À>V iÊ Ñ ÌÑ -°i>Å]Ñii`ÈÑEÑi Ñ §Ìµ} Ê Ñ nÑ ÅÈå `ÑEÑ µÑ §ÎµÌ Ñ nÑ ÅV°i> Ñ §yµÌ Ñ Ñ Þë>ÑEÑ µÑ §ÎµÎ Ñ Ñ ÓÑ/Å>`ÑÅ Þ°Ñ §}µy Ñ §íÑ Å >`V ÅÓÑ >°Ó>Ñ §ÎµÛ Ñ §íÑ ÈÓiÓÑ §}µÛ ``Ì>Ê 9-Ê,>}Ã\Ѳ§§³Ñ æ*ÓÓ]ÑiÓ ]Ѳ§Û³Ñ*iÅÈ]Ñ ²§Õ³Ñ >ÅiÈÑ-Vå>L]Ѳ§}³ÑÈÓiÓ]Ѳ§y³Ñ1-Ñ-iVÞÅÓiÈ -ÕÀVi\ÊÃÌÌÕÌ>ÊÛiÃÌÀÊ ÛiLiÀÊÓää{Ñ Ê ÃÌÌÕÌ>ÊÝiVÕÌÊÀÕ«Ê £È°n ``Ì>Ê -+Ê,>}Ã\Ѳ§§³Ñ `>]Ñ->VÈÑEÑ µ]Ñ ²§Û³Ñ Åi`ÓÑ-ÞÈÈiÑÅÈÓÑ ÈÓ ]Ѳ§Õ³Ñ ÈÓ ÑÈÓÓÞÓ >Ñ-iÅäViÈ]Ñ ²§}³Ñ ÓV Å°Ñ L>Ñ>ÅiÓÈ]Ѳ§y³Ñ1-Ñ-iVÞÅÓiÈÑ >Å>ViÑÅ>i`ѧÑw ÅÑLiÈÓÑiæiVÞÓ Ñ wÑ 9-ÑÓÅ>`iÈÑLçÑÈ>äÑ>Ñ>äiÅ>iÑ wÑÛµÎÑL>ÈÈÑ° ÓÈqÑ >VV Å`ÑÓ ÑÓiÑÈÓÓÞÓ >ÑäiÈÓ ÅÑ>Þ>ÑÈÞÅäiçÑ wÑ L>ÑiºÞÓçÑiæiVÞÓ ÑV ÈÓȵÑçÑÓiÑÈ>iÑ i>ÈÞÅi]Ñ>Å>ViÑÅ>i`ÑÌÑw ÅÑiæiVÞÓ Ñ wÑ -+ÑÓÅ>`iȵÑiÈÓÑiæiVÞÓ Ñ>`Ñ åiÅÑV ÈÓÈÑ V>Ñi>ÑLiÓÓiÅÑ äiÅ>ÑÅiÓÞÅÈÑw ÅÑç ÞÅÑ° ÅÓw µÑ 7RJHWEHVWH[HFXWLRQRI1<6(RU 1$6'$4WUDGHVFDOO*UHJ&DYDOORDW RUYLVLWZZZODEIVFRP >À>V iÊ>V>Ê-iÀÛViÃ]ÊV°ÊiLiÀÊvÊ 9-]Ê -]Ê8ÊEÊ-* ° AIN102405 10/20/05 6:07 PM Page 13 October 24, 2005 www.iialternatives.com Alternative Investment News Search & Hire Directory The following directory includes search and hire activity for the week. The accuracy of the information, which is derived from many sources, is deemed reliable but cannot be guaranteed. All amounts are in US$ millions unless otherwise stated. To report manager hires and new searches, please call Nathaniel Baker at (212) 224-3648, or Robert Murray at 44 (0)207 303 1705 or fax (212) 224-3939. Potential Searches Total Amt Fund Type Consultant Comments USD31,500 Public D.B. Private Equity (P.E.) N/A R.V. Kuhns & Associates, Portland, OR May initiate a search for a private equity manager. Decision at Oct. 21 board meeting. USD240 Endowment Misc. N/A Fund Evaluation Group, Cincinnati, OH Considering search in the next 3-6 months. Interviews with potential candidates around February. Fresno County Employees Retirement Association, Fresno, CA USD2,000 USD2,000 Public D.B. Hedge Fund Of Funds Portable Alpha N/A Wurts & Associates, Santa Monica, CA Ongoing hedge fund-of-funds education. Education will take 3-6 months. Orange County Employees Retirement System, Santa Ana, CA USD5,500 Public D.B. Commodities N/A Callan Associates, Atlanta, GA Considering investing in international natural resources funds. San Bernardino County (Calif.) Employees Retirement Association, San Bernardino, CA USD4,700 Public D.B. Hedge Fund Of Funds P.E. USD30 USD20 New England Pension Consultants, Cambridge, MA May commit to the Siguler Guff’s Distressed Opportunity Fund II. May commit to the Lehman Brothers San Diego County Employees Retirement Association, San Diego, CA USD6,300 Public D.B. P.E. USD88 Cambridge Associates, Boston, MA Scouting for private equity partnerships to raise its 3.6% private equity exposure to the target 5%. Santa Barbara County Employees Retirement System, Santa Barbara, CA USD1,200 Public D.B. Misc. Pension Consulting Alliance, Encino, CA Will be providing education and potential allocation recommendations over the next six months. Ohio State University, Columbus, OH USD1,700 Endowment Misc. N/A None, Will seek venture capital, buyout and p.e. managers. Washington State Investment Board, Olympia, WA USD61,200 Public D.B. P.E. N/A Callan Associates, San Francisco, CA RFP will be posted at (http://www.sib.wa.gov) on or about Oct. 19. Proposals due Nov. 2. USD340 Public D.B. P.E. USD5 Segal Advisors, Boston, MA RFP is available by emailing Rosemary Guillette ([email protected]). Proposals due Nov. 9. Idaho Endowment Fund Investment Board, Boise, ID USD870 Endowment Hedge Fund USD5 RBC Dain Rauscher, Minneapolis, MN Will search for a hedge fund-of-funds manager to handle USD5 million maiden allocation once review is done. London Borough of Lambeth . Superannuation Fund, London, U.K GBP544 Public D.B. P.E, GBP23 N/A Hopes to appoint manager by November. USD87,000 Public D.B. Hedge Fund N/A N/A Trustees have decided not to move into hedge funds anytime soon. Northumberland County Council, Northumberland, U.K. GBP500 Public D.B. P.E. Fund Of Funds GBP30 N/A Fund has shortlisted managers. Decision expected in December. Orange County Employees Retirement System, Santa Ana, CA USD5,500 Public D.B. P.E. Callan Associates, San Francisco, CA Considering investing in international private equity. Pensioenfonds Horen & Catering, Zoetemeer, Netherlands EUR1,970 Corporate D.B. USD194,000 “ Public D.B. “ “ “ “ “ USD145 Los Angeles City Employees Retirement System (LACERS), Los Angeles, CA Fund & City Colorado Public Employees Retirement Association, Denver, CO Creighton University, Omaha, NE Assignment Mandate Size N/A New Searches Worcester County (Mass.) Retirement System, Worcester, MA Updated Searches New York City Retirement Systems, New York, NY N/A P.E. Commodities EUR100 N/A N/A N/A At the final stage of selecting two managers to handle EUR50M each. Appointments scheduled for December. P.E. “ USD200 USD115 Hamilton & Company, Princeton, NJ WL Ross & Co. Birch Hill Equity Partners “ “ USD25 “ ICV Capital Partners “ “ USD50 “ Pinnacle Asset Management Public D.B. Absolute Return USD5 Wainwright Investment Counsel, Boston, MA Massachusetts Pension Reserve Investment Trust USD8,400 Public D.B. P.E. N/A Hamilton Lane Advisors, Bala Cynwyd, PA Sterling Capital Management San Bernardino County (Calif.) Employees Retirement Association, San Bernardino, CA USD4,700 “ “ Public D.B. “ “ P.E. “ “ USD25 USD25 USD25 New England Pension Consultants, Cambridge, MA Fillmore Capital Partners BlackRock Financial Management. Starwood Capital Group San Diego County Employees Retirement Association, San Diego, CA USD6,300 Public D.B. Commodities USD300 Rocaton Investment Advisors, Darien, CT AIG Global Investment Group San Francisco City & County Employees Retirement System, San Francisco, CA USD12,800 Public D.B. P.E. USD15 Portfolio Advisors, Darien, CT Oaktree Capital Management Wal-Mart Stores, Bentonville, AR USD1,500 Corporate D.C. P.E. USD25 Unknown Aldus Equity Partners Completed Searches California Public Employees Retirement System (CalPERS), Sacramento, CA Haverhill Retirement System, Haverhill, MA Data provided by iisearches—the premier daily sales and marketing research tool for investment managers. 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]. Copying prohibited without the permission of the publisher. 13 AIN102405 10/20/05 6:57 PM Page 14 Alternative Investment News www.iialternatives.com October 24, 2005 be the first time structured products will be linked to a fund of funds invested entirely in early-stage managers because “there’s been too much risk before,” he added. In this case, operational risk is reduced because HFR will control all assets via managed accounts, he explained, adding that other banking partners might also offer structures linked to the fund. Investors can also allocate directly into the managed accounts and Godden expects the fund to appeal mainly to institutional investors. The minimum investment is $1 million, but some structured products could have smaller minimums. Fee structure was not believed to be finalized by press time. —Robert Murray HFR READIES (continued from page 1) outperform the wider hedge fund universe by 500-600 basis points per year. A recent study of the HFR hedge fund platform showed that managers who have been trading for less than two years generally outperform the wider group, Godden noted. This may be because new managers have more incentive to outperform because they need to attract assets, he reasoned. A small manager can’t afford to live on management fees alone, so good returns are vital to receive performance fees. As a fund grows, this becomes less important since the amount earned from management fees increases, he added. Smaller funds can also focus on their very best investment ideas, whereas a larger fund is likely to contain more positions, he said. One fund of funds official said HFR’s plan, and its $25 million average allocation, are ambitious. But “some [smaller] new managers wouldn’t—or shouldn’t—take that much from one investor,” he stated. Godden countered that some managers will have more capacity than others. “We’re still assessing them as small businesses; they’ve got to be operationally sound,” he added. Barclays Capital will offer its clients access to the HFR fund via structured products, continued Godden. This is believed to DKR LIQUIDATING (continued from page 1) Fund Index, for example, has fixed-income arbitrage—the strategy that contains structured credit—returning 49 basis points this year. Still, one investor said news of the liquidation came as a surprise. “It’s not great performance but I don’t think it was so bad they had to shut it down,” he said. “The fund has only been trading a couple of months. I think there was plenty of time to turn it around.” One analyst noted that although the strategy has been down most of the year, it is making a rebound. “If the fund is down 78%, it should be closed. Relatively speaking, they’re not doing SUBSCRIPTION ORDER FORM www.iialternatives.com ❑ YES! Please send me 1 year (51 issues) of Alternative Investment News at the special price of $2,295*. Once I have subscribed I can select a permanent User ID and Password to www.iialternatives.com at no extra charge. B4001001 NAME TITLE JANUARY 2004 VOL. V, NO. 1 FIRM GATE SLAMS ON MILLENNIUM INVESTORS FrontPoint Shuts Down Quant Fund FrontPoint Partners has for the first time liquidated one of its funds. The Greenwich, Conn.-based hedge fund juggernaut has shut down the Quantitative Equity Strategies (QES) fund. See story, page 19 ADDRESS Some investors looking to get out of an offshore fund last quarter run by multi-billion dollar hedge fund firm Millennium International Management found they were stuck. That’s because following a guilty plea by a former senior trader at the Millennium International Fund, the fund’s redemption limits were reached, (continued on page 25) At Press Time Ex-Ranger Manager Readies Fund LONGHORNS TO PLOW INTO ALTS 2 U.S. Searches CITY/STATE POSTAL CODE/ZIP Ispat Inland Considers Mezz. Search 10 Albuquerque School Weighs Funds 12 COUNTRY European Searches French Insurer Seeks Hedge Funds Health Charity Makes Foray 16 16 Bob Boldt U.S. Manager News Former Caxton Bond Trader Returns 19 Amaranth Unveils Changes 20 TEL FAX E-MAIL European Manager News Quadriga Readies Fund 22 News From Other Ports Telstra To Tap Managers 25 Departments Market Focus Search & Hire Directory Options for payment: ❍ Bill me ❍ Check enclosed (please make check payable to Institutional Investor News) ❍ I am paying by credit card: ❍ Visa ❍ Amex ❍ Mastercard CREDIT CARD NUMBER EXPIRATION DATE 6 18 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 for substantial monetary damages, as well as liability including statutory damages up to $100,000 per infringement, costs and attorney’s fees. Copyright 2004 Institutional Investor, Inc. All rights reserved. For information regarding individual subscription rates, please contact Joe Mattiello at (212) 224-3457. For information regarding group subscription rates and electronic licenses, please contact Dan Lalor at (212) 224-3045. The University of Texas System’s $11.5 billion endowment funds are seeking to add roughly $575 million in new hedge fund investments this year. The funds, which are managed by the University of Texas Investment Management Company (UTIMCO), currently have a little over 20% of their assets allocated to hedge funds, and the goal a 25% allocation, said Bob is to have Boldt, cio. The school is leaning towards investing in absolute return funds over other hedge fund styles, Boldt (continued on page 4) FARALLON FOLLOWS LONE PINE’S LEAD ON HIGH-WATER MARKS Farallon Capital Managemen t, the San Francisco-based hedge fund behemoth run Steyer, is the latest hedge by Tom fund manager to propose changes to its high-water provisions. As first reported mark on AIN’s Web site, www.iialtern atives.com, the move would the firm in line with a growing put number of funds adopting changes first proposed last by Tiger cub Lone Pine Capital spring that allow hedge fund managers even when their funds are to earn performance fees under water. Farallon wants the ability to earn a reduced (continued on page 26) KLM TO WEIGH FUNDS 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. Check www.iialternatives. com during the week for (continued on page 26) breaking news and updates. SIGNATURE The information you provide will be safeguarded by the Euromoney Institutional Investor PLC group, whose subsidiaries may use it to keep you informed of relevant products and services. We occasionally allow reputable companies outside the Euromoney Group to mail details of products which may be of interest to you. As an international group, we may transfer your data on a global basis for the purposes indicated above. ( ) Please tick if you object to contact by telephone. ( ) Please tick if you object to contact by fax. ( ) Please tick if you object to contact by email. ( ) Please tick if you do not want us to share your information with other reputable businesses. * In Canada, please add US$30 for postage. Other non-U.S., please add US$75. UNITED STATES UNITED KINGDOM HONG KONG Tel: Fax: Email: Mail: Tel: Fax: Email: Mail: Tel: Fax: Email: Mail: 1-212-224-3570 1-615-377-0525 [email protected] Institutional Investor News P.O. Box 5016 Brentwood, TN 37024-5016 44 20 7779 8998 44 20 7779 8619 [email protected] Thomas Gannagé-Stewart Institutional Investor News Nestor House, Playhouse Yard London, EC4V 5EX, England 852 2842 6929 852 2153 5930 [email protected] Sabeena Nayyar Institutional Investor News 17/F, Printing House, 6 Duddell Street Central, Hong Kong AIN102405 10/20/05 6:07 PM Page 15 October 24, 2005 www.iialternatives.com well at all and I’m sure it’s not helping them increase assets.” One structured credit hedge fund manager added that if DKR management can’t increase the fund’s assets, it is going to have a hard time competing in the space. —Jennifer McCandless ANOTHER GOLDMAN • FRA, 4th Annual Fund of Funds Forum, Nov. 14-16, The New York Helmsley Hotel, New York • TWST, Hedge Fund Due Diligence Conference, Nov. 14, The Harvard Club, New York • FRA, Hedge Fund Structured Products, Nov. 17-18, The Flatotel, New York (continued from page 1) and before that the managing director and principal of the Water Street Corporate Recovery Fund, Goldman’s first distressed debt investment fund. Joining Bu are Ross Cohen and Jeffrey Weiner as head of trading and CFO, respectively. Weiner comes from Indus, a Japanese hedge fund and Cohen was senior global equity trader at Federated Global Research. Fees and lockups vary by share class but are mainly in the 2 and 20 range. Goldman and UBS will serve as prime brokers. The latter is currently providing Akana office space. —Nathaniel Baker ENRON VET (continued from page 1) subsequently took over the unit, but after a little over a year it wanted to exit the Nordic market. Lien led a management buyout and then management sold the unit to Pareto in May. The strategy, which so far has consisted solely of proprietary capital, was up 2.59% in September. Pareto trades electricity on Nord Pool, a multi-national exchange for trading electric power in the Nordic region. The Nordic market is unique among power strategies because it is hydro electric, which is driven by weatherrelated pricing, said Lien. Additional funds that will necessitate the hiring of additional managers, are possible. One such possibility would be a European or Nordic carbon dioxide trading fund that would launch next year, he added. For the maiden commodities play, Pareto is seeking to raise $150-200 million and plans to start taking in outside money in November or December, said Lien. It is seeking a broad investor base, but initially will target funds of funds and large institutions. The fund will carry a EUR500,000 investment minimum with a 2% management fee and a 20% performance fee. —Mark Faro Calendar • IIR, Hedge Funds Regulation & Compliance, Oct. 24-25, Beekman Tower Hotel, New York • FRA, Real Return Summit, Nov. 6-8, The Pointe South Mountain, Phoenix • SRI, Distressed Debt Investing Forum, Nov. 7-8, The Venetian Resort Hotel Casino, Las Vegas • Academy & Finance, Asian Hedge Funds 2005, Nov. 9, RitzCarlton Central Park, New York Alternative Investment News Quote Of The Week “Investors like that expression of confidence. They like to save on fees because they’re an issue for the market.”—Larry Jones, senior investment manager at Attica Alternative Investments, on his fund’s unique fee structure, which features a 20% performance fee with no management levy (see story, page 8). One Year Ago In Alternative Investment News Shortly after being slapped with a lawsuit by his business partner, Paul Touradji of tiger cub Catequil Asset Management, was fighting back. The feud between Touradji and Robert Ellis became public when the latter filed a complaint in the Court of Chancery of The State of Delaware where he essentially accused Touradji of looting the firm. [The mudslinging continued when Touradji charged Ellis with making trades with brokerage firms that had no material benefit to Catequil (iialternatives.com, 11/19). The duo eventually liquidated the Catequil funds and moved on to their own separate ventures. Touradji is more energy-focused, while Ellis has traditionally been focused on grain trading.] The Long & The Short Of It Going Short: Edward Jung, founder and manager of Strategic Income Fund, will have nine years to think about why it is wrong to defraud investors. According to an indictment by the Securities and Exchange Commission, Jung was sentenced to 109 months in prison and ordered to pay $21 million in restitution for defrauding investors in his hedge fund. The SEC complaint states that Jung, also a controlling general partner of ETJ Partners, a broker-dealer through which he traded stock options on the Chicago Board Options Exchange, falsely represented his trading performance to prospective investors. After receiving capital, Jung misappropriated investors’ assets to collateralize his own trading activities and to pay for ETJ Partners’ expenses. The indictment charged that Jung’s fraudulent activities caused 55 investors to lose more than $21 million. AIN is going short on Jung, who is not believed to be related to the famous Swiss psychologist, but who will have plenty of time to ponder the workings of his soul. Copying prohibited without the permission of the publisher. 15 PFPC-423 Zero Risk Tolerance Ad 9/22/04 12:07 PM Page 1 Zero risk tolerance? [ All fund accounting is not created equal. To minimize risk you need special expertise.] There are more reasons than ever to be concerned about risk. More regulations and market volatility. Greater tax exposure. Increasingly complex securities transactions. And new business resiliency challenges. That’s why you need PFPC, the fund accounting and custody provider with a 30-year track record for mitigating risk. Our internal control structure offers state-of-the-art compliance monitoring, disaster recovery and tax planning tools. Our dedicated teams handle your business from start to finish, with straight-through processing solutions that minimize handoffs. And our open-architecture technology features built-in controls that manage risk. 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