health workers expected to hunt for hedge funds andor exec readies

AIN.08.30.04
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Page 1
OCH-ZIFF TO DROP DISTRESSED FUND
AUGUST 30, 2004
VOL. V, NO. 15
Web Exclusive
Maryland May Move Into
Hedge Funds
The $30 billion State Retirement and
Pension System of Maryland is
considering making a move into hedge
fund investing.
See AIN’s Web site,
www.iialternatives.com
Hedge Fund Officials Seek
Access Over Comp
Hedge fund officials working for Wall
Street firms are more interested in the
ability to get their ideas heard by
management than on getting a payday,
according to a recent survey.
See story, page 2
U.S. News
Pair of Pensions Back Off
From Hedge Funds
Hedge Funds Push Up Loan
Investor Bonuses
Lehman Moves To Buy Out Partner
4
4
ANDOR EXEC READIES HEALTHCARE FUND
6
6
9
John Regan, ex-portfolio manager for Andor Capital Management’s healthcare fund, has
formed Steeple Capital in San Francisco and will launch a healthcare fund on Nov. 1. Regan
has lured Bill Jennings out of retirement to be the temporary cfo. Jennings, who was chief of
staff to Salomon Brothers’ Chairman Sir Deryck Maughan, will set up the business and the
offshore structures.
Regan had been virtually left on the beach last month when Andor Founder Dan Benton
(continued on page 12)
9
10
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be copied, photocopied or duplicated in any form or by
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and electronic licenses, please contact Dan Lalor at
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The $6 billion 1199 SEIU National Health & Benefit Fund in New York is reportedly
considering its first hedge fund investments and will likely search either for funds of funds or
separate account managers. Lorraine Monchak, the Taft-Hartley fund’s cio, said the fund
does not speak to the press.
1199 SEIU is said to be among a group of more progressive union plans that are now
beginning to inch their way into the hedge fund market in a search for non-correlated
Quick Recovery
Departments
Search & Hire Directory
HEALTH WORKERS EXPECTED TO HUNT
FOR HEDGE FUNDS
3
News From Other Ports
Canadian Fund of Funds
Looks For Marketer
(continued on page 11)
(continued on page 11)
European News
Man Rolls Out Structured Notes
HSBC Builds Marketing Team
GE Dutch Pension Seeks Managers
Och-Ziff Capital Management Group is jettisoning its distressed fund. In a recent cryptic
letter to investors obtained by AIN, firm founder Dan Och announced that the firm was
separating itself from the Och Ziff Freidheim Credit Opportunities Fund. The fund is run by
Steve Freidheim.
The letter stated, “We are very supportive of Steve and his effort,” leading to speculation
that Freidheim will set up shop on his own. The separation from the credit fund will be
effective Dec. 31, the letter says. The fund held $1.2 billion in assets in 2003, according to
SYZ, WARBURG READY FIRST
GERMAN FUND OF FUNDS
Swiss private banking group Syz & Co. and Hamburg-based
private bank M.M. Warburg & Co. are entering the German
fund of funds market. The move follows legislation earlier this
year allowing retail investors to invest directly in funds of
funds. The firms are currently working on an initial fund of
funds, which if successful, might be the first of a series, said
Ricardo Payro, head of corporate communications for Syz.
(continued on page 12)
Check www.iialternatives.com during the week for breaking news and updates.
AIN.08.30.04
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Page 2
Alternative Investment News
www.iialternatives.com
August 30, 2004
At Press Time
Hedge Fund Officials On Wall Street Prefer
Access To Management Over Cash
EDITORIAL
TOM LAMONT
Editor
Hedge fund officials working for Wall Street firms are more interested in the ability
to get their ideas heard by management than the quality of their compensation,
according to InstitutionalInvestor.com’s second annual Best Places to Work on Wall
Street online poll. On a scale of
Hedge Funds
1 to 5 (with 5 being the
highest), hedge fund officials
What’s Important
How Firms Deliver
4.59 Ability to contribute/
4.32
scored the ability to be heard by Ability to contribute/
decision-makers respect
decision-makers respect
management a 4.59 compared
for your ideas/opinions
for your ideas/opinions
to compensation and
Opportunities for
4.47 Commitment to strong
4.21
advancement
business ethics
advancement opportunities,
Communication from top
4.09
which both received 4.47. With Quality of compensation 4.47 management
about firm
regard to how their firms deliver
direction/business decisions
4.41 Opportunities for
4.06
in these areas, respondents gave Commitment to strong
business ethics
advancement
the ability to be heard a 4.32
Communication from top
4.38 Quality of compensation
4.03
score, compensation 4.03 and
management about firm
direction/business decisions
advancement 4.06.
Also surprising were some
of the answers put forward by hedge fund officials relative to the overall survey,
which included several different job functions on the Street. Overall respondents
put compensation as their top concern (4.65) but felt their firms fell short
(3.64). Also falling below expectations were the ability to be heard from
management and opportunities for advancement.
STEVE MURRAY
Deputy Editor
DOUGLAS CUBBERLEY
Executive Editor
(212) 224-3318
MARK FARO
Managing Editor
(212) 224-3287
EMMA TRINCAL
Senior Reporter
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PRODUCTION
DANY PEÑA
Director
LYNETTE STOCK, DEBORAH ZAKEN
Managers
Methodology
This poll is not a scientific survey. It was conducted via InstitutionalInvestor.com’s
Web site and reflects the opinions of only the respondents who participated online.
To view the survey, go to www.institutionalinvestor.com. InstitutionalInvestor.com
received more than 900 responses from 46 firms. Responses were recorded from
MICHELLE TOM, ILIJA MILADINOV,
MELISSA ENSMINGER,
PHILIP CHIN, BRIAN STONE
Associates
JENNY LO
Web Production & Design Manager
MARIA JODICE
Advertising Production Manager
(212) 224-3267
All Respondants
What’s Important
ADVERTISING
2004
Score
2003
Score
How Firms Deliver
2004
Score
2003
Score
Quality of compensation
4.65
4.47
Commitment to strong business ethics
4.17
3.78
Loyalty to employees shown
by management
4.50
4.36
Loyalty to employees shown
by management
3.75
2.93
Ability to contribute/decision-makers
respect for your ideas/opinions
4.47
4.35
Ability to contribute/decision-makers
respect for your ideas/opinions
3.75
3.23
Opportunities for advancement
4.43
4.29
Quality of compensation
3.64
3.13
Commitment to strong business ethics
4.41
4.24
Management responsiveness to
employee concerns
3.59
2.86
Management responsiveness to
employee concerns
4.38
4.20
Opportunities for advancement
3.55
3.16
MIKE McCAFFERY
Publisher, Director of Advertising Sales
(212) 224-3534
[email protected]
firm employees globally; approximately 80% were from U.S.-based employees.
Respondents ranked the importance of 28 categories on a scale of 1 to 5 (with 5
being highest)—this section was called What’s Important to You. They then ranked
how they thought their firm delivered, or performed, on each of those 28
categories—this section was called How Your Firm Delivers.
2
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August 30, 2004
www.iialternatives.com
Alternative Investment News
U.S. News
UBS Structures Notes Tied To
Lighthouse Funds
UBS is currently offering notes pegged to several Lighthouse
Partners funds of funds in an offshore program called STAR.
This relationship began two years ago and the program is an
ongoing one, said Arun Gowdan, a London-based structurer at
UBS. He said UBS selected Lighthouse because “we consider
them the best breed.” He declined to elaborate other than to say
that some of the notes are capital-guaranteed.
Lighthouse was started by Hap Perry as a family office. The
Palm Beach Gardens, Fla.-based firm manages more than
$3.5 billion. Scott Perkins, director of investor relations at
Lighthouse, did not return repeated calls.
Julius Baer Seeks Analyst
Julius Baer Investment Management is seeking a junior equity
long/short analyst to work with Kathryn Cicoletti, who heads
up the equity long/short research team. She replaced Jeff
Haindl, senior equity long/short analyst, who left for American
Express in April. The new junior analyst will replace Marcel
Eggimann, formerly an equity long/short analyst who now
works with Jonathan Morgan’s relative value team, said Bob
Serhus, cio. The firm manages $1.8 billion in fund of funds
assets. Eggimann and Cicoletti declined comment. Morgan was
on vacation and unable to comment.
St. Louis Firm Readies Debut Fund
St. Louis-based Pearl Street Capital will launch a new
long/short equities hedge fund Oct. 1 that will focus on energy
and utilities. The Pearl Street Fund will invest in areas such as
regulated utilities, independent power producers and distributed
power. It will debut with $10-20 million in initial capital, said
Andy Cummings, marketing director. The fund is managed by
Richard Eckenrodt, who founded Lewis and Clark Advisors,
and John Rackers, who was a portfolio manager at RAM
Capital Management.
Pearl has been running a model portfolio since May that
has been increasing despite a poor summer market for
electricity and utilities. The model was up 4.07% in June,
3.27% in July and 0.42% this month, Cummings said. Pearl
has been working with a strategic partner, he added, declining
to name the entity. The firm is pitching the fund to family
offices and funds of funds. “There is a great interest in
electricity. This market has been overlooked for some time
and we are really looking to move in and do something great,”
Cummings added.
The fund carries a 1% management fee and a 20%
performance fee. The minimum investment is $500,000. Pearl
expects to cap the fund at $300-500 million. The prime broker is
Banc of America Securities.
No Thanks
Wyoming Puts Hedge Funds
On Back Burner
The Wyoming Retirement System has been slowly continuing
its hedge-fund education but considers it a back-burner issue
and likely won’t make a move on the matter for the next
several quarters. Harry Wales, deputy director of the $5 billion
fund, said he doesn’t anticipate the fund’s board making a
decision in the foreseeable future. “It’s not a dead issue, it’s just
something the board wants to get more information about,”
Wales said. “As we decide to move into new investment classes,
we spend a lot of time learning before we make a decision.”
The fund first began learning about alternatives last fall and
was considering a 3% to 5% allocation. In the event the
system decides to move into the asset class, it would likely
consider a fund of funds because of tempered risk.
San Joaquin Shies Away From
Hedge Funds
The $1.6 billion San Joaquin County Employees’
Retirement Association has decided to stay away from
hedge funds—at least for this year. Hedge funds could be
re-examined by the board in January if the overall portfolio
falls short of its 8% targeted return. “We would have to
look at hedge funds again and consider investing in
products that give absolute returns,” said Robert Palmer,
retirement administrator for the Stockton, Calif., pension.
Instead of investing in hedge funds, the plan decided to
carve out a 7% allocation to real estate investment trusts.
The board was going to explore a first allocation to hedge
funds this year, but decided to pull back due to the regulatory
uncertainty created by the Securities and Exchange
Commission’s proposed registration requirements, said
Palmer. He added that another negative factor was the lack of
liquidity and transparency of hedge funds. The board also
looked at the performance of hedge funds this year and did
not find the results reassuring.
Copying prohibited without the permission of the publisher.
3
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Alternative Investment News
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Hedge Funds Drive Loan Investor
Pay Higher
August 30, 2004
generally accounting for the bulk of the increases.
The average compensation for loan pros at hedge funds rose to
$778,000 in 2003 from $652,000 in 2002. At funds/advisors,
total compensation increased to $653,000 in 2003 from
$622,000 in 2002. In comparison, distressed debt portfolio
manager compensation soared to $1,053,000 in 2003 from
$694,000 in 2002. Interestingly, the trading volume has
increased for almost all fixed-income markets except for
distressed debt, which experienced a 30% decline. Yet loan
investors can take solace in that they are among the best paid of
the fixed-income group.
Greenwich interviewed 1,462 institutional investors in the fixed
income market, and of that 106 were leveraged loan investors.
The emergence of hedge funds in the loan market has driven
compensation for leveraged loan investors higher, as bonuses at
some firms dramatically increased. Pay across the board for loan
and fixed-income investors rose last year, but loan pros at hedge
funds saw the biggest rise and took home the most moolah,
according to Greenwich Associates’ study of the U.S. fixedincome markets. “Fund managers that are handling riskier
investments are paid better,” stated Melissa De Vries, manager of
institutional marketing with Greenwich.
While the riskier investors may be driving the numbers up,
almost all leveraged loan investors fared
better in 2003 than 2002 after being
(Fixed Income)
(Fixed Income)
relatively flat the prior year. To be sure
the past year has seen prices in the loan
market hit record highs and significant
inflows into the asset class through retail
channels, CLOs and hedge funds. In the
past year total compensation for
leveraged loan portfolio managers
increased to $691,000 in 2003 from
$585,000 in 2002. “The strong fixed
income markets are reflected in the
Pay across the board increased this year. U.S. fixed income investment
Pay raises at hedge funds drove increases, where the average
salaries for 2003,” De Vries added.
professionals saw total cash compensation climb more than 10% in 2003,
compensation jumped to about $750,000 in 2003 from more than $595,000
as average salaries increased almost 5% to nearly $160,000 and bonuses
in 2002—an increase of more than 25%. Much of the increases came
Greenwich data shows increases of 10% from bonuses.
increased by more than 15% to $195,000.
for fixed-income investors with bonuses
Note: In thousands of dollars. Numbers in brackets refer to the number of responses. All chart data from Greenwich Associates.
comment further. Joel Ehrenkranz was on vacation and did not
return calls.
Lehman To Buy Out Joint
Venture Partner
Lehman Brothers is going to buy out its partner in a fund of
funds joint venture in an effort to build up its $100 billion asset
management division. The firm had joined forces with New York
advisory firm Ehrenkranz & Ehrenkranz nearly three years ago
to create the $2.5 billion Lehman Brothers Alternative
Investment Management (LBAIM) (iialterantives.com, 11/4/01).
The buyout was effective Aug. 1 in terms of transferring day-today responsibilities, but the actual exchange of capital probably
won’t occur until at least next year, leaving the senior partners at
Ehrenkranz more time to stay involved, said a Lehman insider.
“It was always planned [since its creation] that at some point the
entity would become 100% owned by Lehman,” he added.
The buyout reflects Lehman’s recent efforts to build up its
asset management division through the acquisition last year of
Neuberger Berman and Chicago fixed-income shop Lincoln
Capital. “The deal structure is such that Lehman Brothers and
Ehrenkranz & Ehrenkranz’s interests remain aligned. Both firms
are equally motivated to achieve superior results and to maintain
a robust growth rate,” said Kerrie Ann Cohen, a Lehman
spokeswoman. She declined to quantify the buyout price or
4
Former Q Investments Managers
Kick Off Hedge Fund
Braeside Investments, a new Dallas-based firm run by two
former portfolio managers from multi-billion dollar hedge fund
firm Q Investments, has launched a long/short equity fund that
focuses on small- and micro-cap stocks. The Braeside Capital
fund will specialize in the $100 million and under market-cap
space, said Todd Stein, portfolio manager. Stein’s partner in the
venture is Steven McIntyre.
The firm plans to cap the fund around a couple hundred
million dollars. “In today’s environment, fund managers may be
tempted to aggressively grow assets under management in order
to collect more fees. We feel, however, that ballooning assets can
hamper performance if a fund outgrows its strategy,” Stein said.
Investors in the fund include high-net-worth individuals, family
offices and institutions. The minimum investment is $750,000.
The fund has a 2% management and 20% performance fee. The
prime broker is Banc of America Securities.
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Alternative Investment News
www.iialternatives.com
August 30, 2004
European News
Man Launches Structured Notes
HSBC Ramps Up Marketing Effort
Man Investments has rolled out a series of capital-guaranteed
structured notes pegged to a portfolio of hedge funds selected by
Man’s RMF Investment Management subsidiary. The Man
RMF Multi-Style Series 2 notes were offered last week and BNP
Paribas provided the capital guaranty, said Christof Grossegger,
a Zurich-based Man spokesman. The underlying hedge fund
portfolio allocates to five different strategies: equity hedged,
event-driven, global macro, managed futures and relative value.
Series 2 is the second offering of capital-guaranteed structured
notes after the launch earlier this year of the Man RMF MultiStyle fund that raised $819 million. This offering seeks
annualized returns of 13-15% with a volatility of 7-9%. The
notes are available in euro or U.S. dollar share classes with a
minimum investment of $50,000 or €50,000.
HSBC Alternative Investments Limited is planning to
increase its marketing effort and is in the process of hiring a
marketing director who will oversee all the firm’s funds. The
appointment is not official but an offer has been made, said
Bill Maldonado, ceo, declining to name the individual. The
firm has been looking for the past few months. “It took a
little while to find the right person and summer is not the
best of times to look,” he noted. The new marketer is
expected to join in early September and will work alongside
one other colleague. They will pull together the firm’s
marketing efforts, which have to date been far more widely
dispersed, he explained.
The firm launched a multi-strategy fund two months ago
and has plans for more funds, including one focusing on Asia
and Latin America which is expected to launch by the end of
the year (iialternatives.com, 7/11). The multi-strategy fund was
soft-launched with $20 million at the beginning of June and
has already grown to $70 million, said Maldonado.
The firm will probably launch a couple of new vehicles next
year but will also concentrate on growing its existing funds, he said.
U.K. Firm Considers
Long/Short Funds
London-based hedge fund firm Orn Capital is considering
developing new long/short vehicles. The firm will continue to
focus on research-driven, bottom-up strategies, said Lindsay
Jones, head of business development. These are likely to include
sector-specific long/short and Asia long/short funds.
Any action taken in this direction would be opportunistic
and depends on the firm finding the right team, he explained.
Orn currently runs around $750 million across four singlestrategy hedge funds and one multi-strategy fund. A fifth
single-strategy vehicle, focusing on energy and resources, is due
for launch in the next few months (iialternatives.com, 7/30).
“We want to continue to grow the business gradually,” said
Jones. “It depends on when you meet the right kind of team.
We don’t want to launch at a rapid rate.”
The energy fund will be Orn’s first sector-specific vehicle.
Sectors pursued going forward will probably include financial
services, telecommunications and technology, said Jones. Other
possibilities include healthcare and pharmaceuticals, as well as
industrials, although the firm is less sure about these, he added.
The Asia fund is likely to be Japan-focused, if not Japanspecific. Just a few weeks ago, Jones was in discussions with a
manager interested in launching a Japanese long/short fund, but
the manager has since decided to join an established Asia-focused
hedge fund rather than start one from scratch, he said. “No
doubt, in the next four to six weeks, I’ll find someone else to do
the same strategy,” predicted Jones.
6
British Pension Puts Hedge Funds
On Hold, Seeks Private Equity
The £950 million Royal County of Berkshire Pension Fund
will not look at hedge funds for at least another year. The
pension has decided instead to allocate 5% to private
equity. “Private equity has been on the go longer than hedge
funds. They have a longer track record,” said Jack Johnson,
fund manager.
The board approved the allocation to private equity last
month and will appoint a manager later this year. The private
equity mandate will be funded out of the equity portfolio.
The decision not to invest in hedge funds this year was
largely based on the advice of the firm’s consultant, Hymans
Robertson, which did not find it appropriate. The scheme will
conduct an actuarial valuation later this year and after that will
proceed with an asset-allocation study, Johnson said. “In a year
or 18 months from now we could look at hedge funds again,”
he said.
The plan allocates approximately 65% to stocks, 10% to
real estate, 20% fixed-income and 5% to private equity.
George Henshilwood, a Glasgow-based Hymans consultant
who advises the pension, did not return a call.
Copying prohibited without the permission of the publisher.
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Alternative Investment News
Page 8
www.iialternatives.com
August 30, 2004
Hedge Funds Pile Into Oil Market
ABN Amro Hits Delay In Germany
Hedge funds and prop desks have been entering the oil
derivatives market in increasing volume in the last few weeks to
take advantage of the widening price difference between crude oil
and jet fuel, according to traders. A squeeze on refining capacity
means jet fuel prices have rocketed beyond the 25% rise in crude
oil prices in the last month. Data from Argus, the energy price
reporting service, shows the differential between jet fuel and
Brent Forties Oseberg benchmark crude oil was around $10 a
barrel two weeks ago, compared to $4 a barrel last year.
In one popular trade, investors take positions in crack
spreads, for example going long crude oil and short jet fuel via
a swap, according to hedge fund marketers. Ian Vickers,
manager in risk control at RWE Trading in Swindon, said the
company’s proprietary fuel desk has executed similar trades in
the last few weeks.
ABN Amro Asset Management’s attempt to register its first
German hedge fund of funds have been delayed. The firm expected
to launch the vehicle in Luxembourg mid-way through August and
cut over in Germany during October (AIN, 7/19). The registration
process has taken longer than expected in Luxembourg, said
Helmut Doerrbecker, senior sales manager in Frankfurt. There
have been no delays on ABN Amro’s side and the hold-up is due to
workload pressures faced by the Luxembourg authorities, he stated.
“As soon as we have registered in Luxembourg, we have to inform
the German authorities, who then have three months to ask for any
amendments to be made,” he explained. He was hopeful that
registration will be completed by September and that the fund of
funds will be ready to launch in Germany around December.
Liberty Ermitage Readies Fund, Gets
New Chief
Jersey-based asset manager Liberty Ermitage,
which has around $1.7 billion in hedge fund
assets, has hard-closed its European-focused
hedge fund seeding vehicle and is developing a
global equivalent. Separately, the firm has
promoted CIO Ian Cadby to take over for
Ron Mitchell, founder and ceo, effective
Ian Cadby
Sept.1.
Liberty’s European seeding vehicle, Strategic Partners Fund,
reached its target of $200 million recently. “As [the fund] became
more successful, we were approached by several institutions
about doing the same thing on a global basis,”
Cadby explained. The global version is
expected to launch in the first half of 2005
and will cover all strategies, he added. The
firm is already anticipating an initial
$300 million, based on indications received
from three institutions. The fund would close
Ron Mitchell
when it reaches $500 million. The fees for the
new fund have not yet been determined.
Cadby will retain his current role as well as become ceo. “You
typically find with hedge funds that the cio and ceo roles are
intertwined,” noted Cadby. Mitchell will remain on the firm’s
board as vice-chairman until he retires at the end of March.
Cadby’s promotion has been in the works for the past two years,
since Mitchell announced his intention to retire. Cadby was
named cio earlier this year. Mitchell said that he founded the
firm in 1996 with the intention of building it up before handing
over the reins. His departure from Liberty will also mark the end
of his career in hedge funds, he added.
8
ADI Hires Convertible Arb Pro
ADI, the French alternative fund manager with €5.83 billion
under management, has hired Paul Besson, head of volatility and
convertible arbitrage at CCR, a subsidiary of Commerzbank
with €200 million under management. Arnaud Lagarde,
previously at BNP Paribas in Paris, will replace Besson at CCR.
Besson, who joins ADI at the end of October, will be
responsible for the quantitative research department focusing on
converts, credit and volatility. This is a new position created as a
result of internal reorganization at ADI. The work will include
developing new quantitative processes, generating ideas on those
markets, testing strategies and applied in-depth research,
according to Besson.
BNP Paribas Preps German Wrapper
BNP Paribas Asset Management in Germany is seeking
approval to launch a domestic fund of hedge funds wrapper in
Germany. The details of its prospectus are being examined by the
Bundesanstalt für Finanzdienstleistungsaufsicht and is expected
to be approved in the next two to three weeks, said Josef
Altmann, head of global funds.
The new product will be issued in the form of a certificate,
which invests in multiple single-manager hedge funds, all of
which are tracked by a tailor-made index. This multiple fund
selection makes a certificate comparable to a fund of funds
structure, explained Rolf Dreiseidler, head of agency office at the
Bundesverband Alternative Investments.
The wrapper will select hedge funds that are tracked by the
Tremont index. It will first be offered to private clients through
a subscription period in October or November, followed by a
retail roll out in March, when the firm registers it on the
German stock exchange.
A certificate is a more favorable investment vehicle for retail
clients, explained Altmann. Investors who invest directly in funds of
Copying prohibited without the permission of the publisher.
AIN.08.30.04
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6:13 PM
Page 9
August 30, 2004
www.iialternatives.com
funds are exposed to a tax disadvantage. This is not a problem for
institutional investors but retail investors are burdened by having to
pay tax on the earnings of the fund and the invested capital, said
Altmann. If investors invest in a fund of funds wrapper for more
than 12 months, they are exempt from tax, said Dreiseidler.
GE Dutch Pension Seeks
Hedge Funds
General Electric’s €400 million pension scheme for Dutch
employees is planning to hire its first alternatives managers in the
first half of next year. The Stichting GE Pensioenfonds expects to
invest a maximum of 10% of its assets in hedge funds, high-yield,
venture capital and private equity to diversify risk, said Jan Aerts,
director in Bergen Op Zoom. The investment committee has been
gathering information about these asset classes since its last
asset/liability study in 2002 and is now comfortable it possesses
sufficient knowledge to go ahead with investments.
News From Other Ports
JPMorgan Transfers Credit Honcho
For New Asian Role
Alternative Investment News
London Manager To Open
In Singapore
Platinum Capital Management, a London-based hedge fund
manager, expects to open an office in Singapore by October,
pending regulatory approval. Craig Reeves, managing director,
said regulations governing foreign asset managers launching
funds are more flexible in Singapore than in Hong Kong.
“There’s less fund fraud [in Singapore] than in Hong Kong,” he
explained, adding that Singapore might “become the next
Geneva or Zurich.” Several other hedge fund managers have set
up shop in Singapore this year. Platinum has hired two sales and
client servicing professionals to staff the new office, but Reeves
declined to name them.
The Monetary Authority of Singapore has recently
approved five of the firm’s funds. Platinum expects to launch
another hedge fund on Sept. 1, which is also awaiting
approval. The new fund, Premier Platinum Fund, will invest
in fixed-income short-term interest rate arbitrage and will
have a minimum investment of $100,000. It expects to close
at $200 million in the next couple of years and will target
institutional investors.
JPMorgan has shunted Dean Rostrom, v.p. in the investors
solutions group in New York, to take a new role in Tokyo as
Asian head of global structured credit marketing and
alternative investment products. Rostrom will be responsible
for product management of syndicated structured credit
products for the region, according to Mika Watanabe,
spokeswoman in Tokyo.
Canadian Fund of Funds
Seeks Marketer
Abria Financial Group, a Toronto-based fund of funds is seeking
an additional marketer. The new hire will be involved in both
sales and marketing for the Canadian market and will work with
Davee Gunn, head of business development, said Henry Kneis,
ceo and cio.
The firm’s assets have doubled from $100 million at the
beginning of the year to $200 million now. The position is being
created to tap into the Canadian institutional market, Kneis said.
“Canada is a couple of years behind the U.S. but interest at the
institutional investor level has picked up dramatically,” he said.
“It is going to happen in Canada and we’ve grown to a point
where we want to be prepared.”
The firm also recently added Dominc Staniscia as its new cfo
from the Ontario Teachers’ Pension Plan Board and Michael
Doran, as senior v.p., investment management, who joined from
the University of Toronto Asset Management.
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Copying prohibited without the permission of the publisher.
9
AIN.08.30.04
8/26/04
6:13 PM
Page 10
Alternative Investment News
www.iialternatives.com
August 30, 2004
Search & Hire Directory
The following directory includes search and hire activity for the week. The accuracy of the information, which is derived from many sources, is deemed
reliable but cannot be guaranteed. All amounts are in US$ millions unless otherwise stated. To report manager hires and new searches, please call
Mark Faro at (212) 224-3287, Emma Trincal at (212) 224-3648, Jennifer McCandless at (212) 224-3615 and Robert Murray at 44 (0)207
303 1705 or fax (212) 224-3939.
Potential Searches
Fund & City
BNFL Magnox Generation,
Gloucester, U.K.
Total
Fund
Amt (Mlns)
Type
GBP1,200 Corporate D.B.
Community Foundation of Greater
Flint, Flint, MI
Maryland State Retirement & Pension
System, Baltimore, MD
Maryland State Retirement & Pension
System, Baltimore, MD
Oklahoma Firefighters Retirement
System, Oklahoma City, OK
ÖPAG Pensionskassen
Aktiengesellschaft, Vienna, Austria
Assignment
Global/ Alternative
Mandate
Size
(Mlns)
N/A
EUR220
Hammond Associates,
St. Louis, MO
Altius Associates Limited,
Richmond, VA
Altius Associates Limited,
Richmond, VA
Asset Consulting Group,
St. Louis, MO
None
EUR110
None
USD154
Summit Strategies Group,
St. Louis, MO
Comments
Fund will start an asset allocation review in Sept. 2004.
Could look at alternatives, as consultant Aon Consulting
encourages its clients to consider all asset classes.
Decisions before year’s end.
Hired Hammond Associates as consultant to advise
on first investment in alternatives.
Fund may consider absolute return strategies.
No timeframe for decision.
Fund may consider hedge fund and absolute return
strategies. No timeframe set.
Plan is examining hedge funds. May search in fall 2004.
No timeframe for decision.
Likely to increase its 4% allocation to hedge funds to
10-15% after legislation is passed in Sept. 2005. Will
look at funds-of-funds, single hedge funds and CTAs.
Will decide in 2005 whether to invest in private equity.
Potential allocation is 5% maximum and likely
through funds-of-funds.
Plan is being educated on alternatives. Will consider
searches at the end of Aug. 2004.
US/ Alternative/
Absolute Return
US/ Alternative/
Hedge Fund-of-Funds
US/ Alternative/
Absolute Return
USD10
Charles Sherman, Cambridge
Associates, Boston, MA
New England Pension
Consultants, Cambridge, MA
New England Pension
Consultants, Cambridge, MA
Will search for an absolute return manager to handle
USD10 million. Expects to hire one by Nov.
Looking to make a maiden allocation to alternatives, such
as hedge funds-of-funds and absolute return.
Looking to make a maiden allocation to alternatives, such
as hedge funds-of-funds and absolute return.
Public D.B.
Global/ Alternative/
Hedge Fund-of-Funds
GBP45
Olivier Cassin, bfinance,
London, U.K.
USD11,500
Public D.B.
US/ Alternative/
Hedge Fund
USD350
New England Pension
Consultants, Cambridge, MA
GBP4,700
Corporate D.B.
Fund has selected three managers to handle a portfolio
of about GBP45 million, but will name the firms after the
contracts are signed in Sept. 2004.
Fund will launch an RFP for hedge fund mangers in Sept.
2004. Deadline not yet determined.
No further details available.
Fund has decided not to invest in alternatives such as
high-yield bonds, emerging market debt and hedge funds.
Fund has investments in real estate and venture capital.
USD1,040
Public D.B.
USD1,040
Public D.B.
USD6,000
Public D.B.
USD6,000
Public D.B.
EUR2,200
Union/Multi-
USD115
Foundation
US/ Alternative
N/A
USD30,100
Public D.B.
N/A
USD30,100
Public D.B.
USD1,500
Public D.B.
EUR2,200
Union/Multiemployer D.B.
US/ Alternative/
Absolute Return
US/ Alternative/
Hedge Fund
US/ Alternative/
Distressed Debt
Global/ Alternative/
Hedge Fund
ÖPAG Pensionskassen
Aktiengesellschaft, Vienna, Austria
EUR2,200
Union/Multiemployer D.B.
Tulare County Employees Retirement
Association, Visalia, CA
USD770
Public D.B.
USD235
Public D.B.
USD175
Foundation
USD175
Foundation
Dorset County Council Pension
Scheme, Dorset, U.K
GBP850
New Mexico State Investment
Council, Santa Fe, NM
Prudential Plc. Staff Pension Scheme,
Ilford, U.K.
Global/ Alternative/
Private Equity
Fund-of-Funds
US/ Alternative/
Hedge Fund
N/A
N/A
Consultant
Adrian Kite, Aon
Consulting, London, U.K.
New Searches
Childrens Museum of Indianapolis,
Indianapolis, IN
Community Foundation for Southeastern
Michigan, Detroit, MI
Community Foundation for Southeastern
Michigan, Detroit, MI
USD18
USD18
Updated Searches
Global/ Alternative/
Hedge Fund
N/A
Watson Wyatt Worldwide,
London, U.K.
Completed Searches
Anne Arundel County Retirement
System, Annapolis, MD
Anne Arundel County Retirement
System, Annapolis, MD
Missouri State Employees’ Retirement
System, Jefferson City, MO
Missouri State Employees’ Retirement
System, Jefferson City, MO
ÖPAG Pensionskassen
US/ Alternative/
Hedge Fund
US/ Alternative/
Hedge Fund
US/ Alternative/
Timberland/Vineyards
International/ Alternative/
Timberland/Vineyards
Global/ Alternative/
USD10
USD20
USD100
USD75
EUR44
New England Pension
Consultants, Cambridge, MA
New England Pension
Consultants, Cambridge, MA
Summit Strategies Group,
St. Louis, MO
Summit Strategies Group,
St. Louis, MO
None
K2 Advisors
Mariner Investment Group, Inc.
Resource Management Services
Global Forest Partners
AIG Global Investment Corp. (Europe) Ltd.
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]; or Paul Quartly at +44 (0) 20 8487 8284.
10
Copying prohibited without the permission of the publisher.
AIN.08.30.04
8/26/04
6:13 PM
Page 11
August 30, 2004
www.iialternatives.com
Alternative Investment News
in April revealed the allocation had been reduced to 20%.
Calls to Freidheim were not returned. Och was traveling and
did not return messages left at his New York office. The letter
referred inquiries to investor relations, but calls to investor
relations officials J.K. Brown and Kevin Silva, were not
returned.
—Amanda Fung & E.T.
OCH-ZIFF TO
(continued from page 1)
Alpha magazine’s rankings of the top 100 hedge funds.
Freidheim is also the manager of the distressed allocation for
the firm’s flagship multi-strategy fund. In January, the fund had a
HEALTH WORKERS
(continued from page 1)
August 16, 2004
returns and portfolio diversification. In the past many plans have
tended to avoid this more complex investment strategy for a
number of reasons, including unfamiliarity with the asset class
and concern over transparency issues. But three years of choppy
markets and unsatisfactory returns along with the ongoing
mainstreaming of hedge funds is beginning to bring about a sea
change among Taft-Hartley investment professionals.
It could not be determined how much the plan may invest.
Marco Consulting has already moved an unspecified portion of
the plan’s assets into private equity, specifically venture capital.
Founder Jack Marco is said by Taft-Hartley marketers to be
encouraging his clients to look at hedge funds, but he declined
to comment.
—Imogen Rose-Smith
Dear Investor:
Today we have sent a letter to all investors in the OZF Credit Opportunities Fund announcing the
separation of Dan Och and Och Ziff Capital Management from the Credit Fund. We are very supportive
of Steve and his effort. The separation will officially take place on December 31, 2004.
Och-Ziff Capital Management has had ample time to prepare for this transition. We are very comfortable
that there will be no negative impact on our firm or any of the funds we manage.
Please feel free to call me or our Investor Relations team with any questions.
Sincerely,
Daniel S. Och
32% distressed allocation, and in a letter to investors, Och
announced his intentions to reduce the slug. A subsequent letter
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B40801
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-billio
n dollar hedge fund firm
Millennium Internation
al Management found they
were stuck. That’s because
following a guilty plea by
a
former senior trader at the
Millennium Internationa
l
Fund, the fund’s redemption
limits were reached,
(continued on page 25)
At Press Time
Ex-Ranger Manager Readies
Fund
LONGHORNS TO PLOW
INTO ALTS
2
U.S. Searches
CITY/STATE
POSTAL CODE/ZIP
Ispat Inland Considers Mezz.
Search 10
Albuquerque School Weighs
Funds 12
COUNTRY
European Searches
French Insurer Seeks Hedge
Funds
Health Charity Makes Foray
16
16
Bob Boldt
U.S. Manager News
Former Caxton Bond Trader
Returns 19
Amaranth Unveils Changes
20
TEL
FAX
E-MAIL
European Manager News
Quadriga Readies Fund
22
News From Other Ports
Telstra To Tap Managers
25
Departments
Market Focus
Search & Hire Directory
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The University of Texas
System’s $11.5 billion endowmen
t 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 is to have
a 25% allocation, said Bob
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 MARK
S
(continued on page 4)
Farallon Capital Manageme
nt, 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.iialter
natives.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 that allow hedge
fund managers to earn performanc spring
even when their funds are
e 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 Pensioenfo
nds, 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 to
hedge funds of funds at a
board meeting in April.
Check www.iialternatives
.com during the week for
(continued on page 26)
breaking news and updates.
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AIN.08.30.04
8/26/04
6:13 PM
Alternative Investment News
Page 12
www.iialternatives.com
ANDOR EXEC
(continued from page 1)
announced that he and Co-Founder Chris James were splitting
up. Benton announced that James was leaving to start his own
hedge fund and that both the Andor Healthcare fund managed by
Regan and James’ Diversified Growth fund would be liquidated
by Aug. 31. Regan also left at this time.
Regan plans to have a 2% management fee and 20%
performance fee for his new fund. He is pre-marketing it and has
indicated that he will have $80 million committed for day one.
He plans to soft-close the fund at $300 million and then raise an
additional $200 million for a hard close at $500 million.
Several traders and analysts left to work with James, including
two biotechnology analysts that had worked for Regan at Andor.
As a result, Regan is seeking a senior biotechnology analyst to
work on his new fund.
Regan and Jennings did not return calls and Steve Bruce, a
spokesman for Andor, declined to comment.
—Emma Trincal
SYZ, WARBURG
(continued from page 1)
The move will also be the first step into hedge funds for
Warburg, which manages €18.6 billion.
The initial fund is likely to be multi-strategy and will be aimed
at both individual and institutional investors. “We would like a low
investment minimum to allow everyone to participate,” said Payro,
speculating that this could be lower than €1000. A major factor
limiting private banks’ involvement with retail investors is often the
cost of bespoke management, but “that doesn’t mean people with
less to invest can’t have access to top-performing products,” he said.
“We see no problem with having a low minimum. In fact, it would
be even better if there was no minimum at all.”
The partners intend to take advantage of Warburg’s existing
German distribution network and its relationships with fund
providers such as retail banks, which could offer the fund of
funds via a distribution agreement. For its part, Syz is already
actively selling long-only funds in the country, noted Payro.
Syz will be involved in hedge fund selection and advising on
style allocation, whereas Warburg will focus on administration and
legal issues. “It is still too early to look at managers as we don’t
know exactly what strategies we will be investing in,” explained
Payro. The German fund of funds is likely to follow Syz’s existing
funds of funds by containing 20-30 managers. The two banks will
meet this Friday to discuss the schedule and decide such things as
fees, added Rolf Lauer, head of marketing for Warburg.
Registration began earlier this summer and is expected to take
six months. The firms are hopeful the first fund can be launched by
12
August 30, 2004
the end of the year. “The process has started, and it is going back
and forth between lawyers and the German regulators,” said Payro.
Further funds of funds are likely to be developed, which will
be more strategy-specific. This would follow Syz’s experience in
the Swiss market, where an initial multi-strategy vehicle has led
to requests for more focused funds. The firm currently runs
funds through its Luxembourg SICAV, each of which specializes
in an individual family of strategies, including macro, CTA,
arbitrage and long/short. “We expect the German market to go
the same way,” predicted Payro. Syz and Warburg might also
consider launching another multi-strategy fund of funds with a
higher allocation to volatile strategies, he added.
—Robert Murray
Calendar
• Hedge Funds World presents its 7th Annual Hedge Funds
World Asia 2004 event on Sept. 13-15 at the Hong Kong
Convention and Exhibition Centre. To find out more, visit
www.hedgefundsworld.com.
Institutional Investor Events will host Hedge Fund Best
Practices Seminar: Succeeding in the New Regulatory Environment
on Sept. 14 at the Explorers Club in New York. To find out
more, go to www.iievents.com.
The Institute for International Research will host GAIM
USA: Fund of Funds on Sept. 20-22 at The Plaza Hotel in
New York. For more information, please visit,
www.iirusa.com/fundoffunds.
Opal Financial Group will host the European Alternative
Investing Summit on Sept. 29 to Oct. 1 at the Palais De La
Méditerranée Hotel in Nice, France. For more information,
visit www.opalgroup.net/sw/.
•
•
•
Quote Of The Week
“We see no problem with having a low minimum. In fact, it would be
even better if there was no minimum at all.”—Ricardo Payro, head
of corporate communications for Syz & Co., on the possibility of
launching a fund of funds in Germany with an investment minimum lower
than €1000 (see story, page 1).
One Year Ago In Alternative Investment News
Highbridge Capital Management hired Alec McAree, from
Citadel Investment Group, as head of a newly formed
long/short equity group. [Dubin & Swieca Capital
Management, the fund of funds entity run by Highbridge honchos Glenn Dubin and Henry Swieca, hired Tracy McHale
Stuart from Goldman Sachs Asset Management, as its president
in April (iialternatives.com, 4/12).]
Copying prohibited without the permission of the publisher.