investors staying put in quant hedge funds andor vets to launch

AIN082007
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SAC TO REOPEN MULTI-STRAT FUND
AUGUST 20, 2007
VOL. VIII, NO. 33
Web Exclusive
Korea Life Insurance is seeking
to invest $400 million in international
alternatives before the end of the year.
visit iialternatives.com
At Press Time
Tricom To Roll Out Offshore Fund
Mulvaney Takes Big July Hit
2
2
U.S. News
Eos Plans Distressed Fund
AQR Loses 13% In Quant Fund
MKP Eyes Investors For Credit Funds
Gerken Plots Several Launches
3
3
4
4
European News
Stenham Makes Move To Brazil
6
Homm Avoids Losses In Most Strats 6
Frankfurt Shop Plans U.S. Fund
6
Private Equity News
Film Fund Pitches To Non-Profits
Forsyth Adds Positions To FoF
8
8
Under The Hood
Stowe Avoids Credit Crisis
Conquest Benefits From Long Bets
9
9
Departments
Mandate Scoreboard
Data Zone
Living On The Hedge
With Logan Short
10
11
Steven Cohen’s $14 billion SAC Capital Management is planning to reopen its multistrategy hedge fund to new investors Oct. 1. The move is seen as a way to take advantage of
buying opportunities created by the recent sell-off in global financial markets. An SAC
spokesman declined to comment.
The SAC Multi-Strategy Fund originally launched in late 2005, partly to accommodate
institutional investors (iialternatives.com, 9/23/05). Its terms—3% management fee, 33%
performance fee, three-year lockup—are believed to be the most stringent anywhere. Yet even
after these fees, the fund returned north of 30% last year.
—Nathaniel Baker
Back Away From The Ledge, Please
INVESTORS STAYING PUT IN QUANT HEDGE FUNDS
Consultants and institutional investors are keeping a stiff upper lip in the face of hedge fund
setbacks. This is a case where “everyone freaks out and then it’s back to business as usual,”
said Jaeson Dubrovay, senior consultant and head of hedge fund research at New England
Pension Consultants. Dubrovay and other advisors are recommending that their clients stay
put during market volatility, instead of collectively pulling out of quant hedge funds.
The $80 billion New Jersey Division of Investments has about $3 billion in direct hedge
funds and funds of funds. The Garden State has no plans to alter its investment mix,
(continued on page 12)
ANDOR VETS TO LAUNCH ASIAN
EQUITIES FUND
Yasushi Nakahara and Edward Sun, former
principals at Andor Capital Management, have cofounded BlackShip Capital Management in San
Mateo, Calif., and are preparing to launch its
maiden hedge fund by the end of September.
The Blackshore Core Fund, a long/short Asian
equity strategy, will focus on technology in the region,
(continued on page 12)
12
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ODEY OPENS UP ACTIVE TRADING STRATEGY
Crispin Odey’s $4.3 billion Odey Asset Management is targeting investors with its first
trading hedge fund, a departure from the firm’s fundamental strategies. Odey Tactical
Advantage was launched internally last summer and is managed by Suren Patel.
The fund invests across all major asset classes, allocating and reallocating more frequently
than the firm’s stable of fundamentals-driven offerings, which tend to hold positions for long
periods until the firm’s view is borne out. The London-based firm waited until it had built a
one-year track record before starting to market the fund, according to David Helm, director
(continued on page 12)
Check www.iialternatives.com during the week for breaking news and updates.
AIN082007
8/16/07
6:08 PM
Page 2
Alternative Investment News
www.iialternatives.com
August 20, 2007
At Press Time
Tricom Gears Up For Offshore Fund
Sydney-based Tricom Investment Management, with
AUD120 million under management, is preparing to launch
an offshore version of its Chairman Select Portfolio, an Australian long/short
equity fund. The onshore version was launched in October 2004 and holds
around AUD27 million from Australian institutional investors, high-networth individuals and retail investors, said Tim McNamara, portfolio
manager. The Cayman-domiciled offshore version is expected to launch in
September, he added.
The offshore iteration will follow the exact same strategy as the existing fund,
investing in a relatively concentrated portfolio of 20-30 Australian stocks. It will
be offered in U.S. dollar and euro share classes and is likely to launch with a few
million dollars from a small number of seed investors, said McNamara. The
strategy has the potential to grow to $300-400 million across both onshore and
offshore funds, he said. The Cayman fund will charge a 2% management fee and
20% performance fee with a high-watermark. The investment minimum will be
$500,000 or euro equivalent. The onshore fund returned 23.3% last year and is
up 17.07% this year to the end of July.
Mulvaney Records Largest Monthly Loss
London-based Mulvaney Capital Management suffered its worst-ever month in
July. Its sole fund, which is focused on financials and commodity futures, lost
16.89%. This more than wiped out gains made over the previous three months,
which had seen the Global Markets Fund edge closer to the black after a stormy
February and March. The fund is down 18.62% for the year to the end of July.
“These market conditions were particularly hard for long-term trend followers
like us,” said Colin Lloyd, head of investor relations.
The $169 million strategy was hit by reversals in interest rates and stocks, but
Lloyd said the firm’s exposure to commodities—usually a diversifier—also hurt
returns as factors unrelated to the credit crisis impacted these positions. For
example, rain in the Ivory Coast caused the price of cocoa to drop upon concerns
that production would be down. “To be hurt in currencies, interest rates and
stocks would have been unpleasant,” said Lloyd. “But to lose 5% from crops and
2.5% from livestock is the icing on the cake.”
As a long-term trend follower, Mulvaney tends to react slowly to changing market
conditions and is therefore unlikely to make any dramatic shifts in its exposures, said
Lloyd. “This has highlighted various things we’ll be researching thoroughly,” he said.
“Extreme price action, regardless of its impact on our P&L, enriches our data set, but
it’s unlikely to lead to us making any changes to our model in the near term.”
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AIN082007
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August 20, 2007
www.iialternatives.com
Alternative Investment News
U.S. News
Citigroup Marketer Sets Up
Consulting Firm
Audrey Seybert, a former investor relations pro at Citigroup in
New York, is starting her own hedge fund consulting firm in San
Diego. Eventually her goal is to turn Audrey Frances Consulting
into a third-party marketing firm, she said.
The new outfit’s first client is start-up hedge fund firm First
Horse Capital, based in Hong Kong. Seybert also just signed up
a second hedge fund firm in Asia, and is currently in discussions
with several funds in the U.S.
Eos Plots Distressed Launch
The $2.6 billion hedge fund and private equity firm Eos
Partners is in the early stages of planning a distressed debt fund
to launch this fall. The firm is seeking to raise between $750
million-$1 billion for the fund, with $75-100 million seeded by
Eos. A spokesman declined to comment.
The fund will be launched in response to the dislocation in
credit markets, which has provided more opportunities for
distressed players. Matt Meehan will manage the strategy at Eos,
focused on middle-market companies in Europe. Meehan
currently manages the $1.5 billion Credit Opportunities Fund, a
separate strategy that is part high-yield credit trading and part
controlled, distressed and special situations. The fund returned
around 2.5% in July.
The firm is preparing to launch a long/short U.S. equity
strategy in October, managed by Evan Steen (AIN, 8/6).
Torrey Seeks Office Space Abroad
New York-based fund of hedge funds
firm Torrey Associates is in early
discussions about opening a
second office abroad as it seeks
to expand research coverage. The
firm has not yet decided where it
would open an office, according
to Ricardo Cortez, president.
The firm’s only staff outside of
New York is an analyst working in
Hong Kong. It has been adding staff to its main office as well,
hiring John McClenahan as director of risk management on
Aug. 13 and Perry Keck as director of institutional sales in
June. Both report to James Torrey, ceo. McClenahan joins the
16-person firm from North Sound Capital Management,
where he was chief risk officer of the firm’s long/short equity
strategy. Previously, he worked at Andor Capital Management,
also on the firm’s long/short equity strategy.
Keck is heading up the firm’s efforts to target U.S.
foundations, endowments, private and corporate pension funds
with between $250-1 billion. He joined the firm from Proctor
Investment Managers (iialternatives.com, 6/20).
The firm was founded by Torrey in 1990 and manages several
funds of funds with long/short equity managers in the U.S. and
globally, investing primarily in emerging managers with a 1-4
year track record.
Goldman Leads $3 Billion Infusion
Into Struggling Fund
Goldman Sachs and various other investors, including Perry
Capital, are making a $3 billion equity investment in Goldman’s
struggling Global Equity Opportunities quant hedge fund. “We
consider this an attractive investment opportunity,” a Goldman
spokesperson said in a statement. “The investment will also
provide the fund with more flexibility to take advantage of the
opportunities we believe exist in current market conditions.”
Several Goldman quant funds have “suffered significantly” as
a result of the recent surge in volatility—factors which “have
combined to challenge many of the trading algorithms used in
quantitative strategies,” the statement adds. These include
Global Alpha, a multi-strategy hedge fund and the North
American Equity Opportunities Fund (NAEO), an equity
long/short quantitative strategy. Goldman has reduced risk and
leverage in these funds and believes they are positioned to
actively trade again.
The investors include C.V. Starr, and Eli Broad, along with
Goldman and Perry but existing investors in the fund will also
have the opportunity to participate, the statement says.
AQR’s Quant Fund Drops 13%
AQR Capital Management’s quantitative
hedge fund strategy was down by 13% on the
month early last week, as first reported on
AIN’s web site iialternatives.com. The firm’s
long-only equity strategies were also affected
to some extent, according to a letter to
investors from Clifford Asness, founding
Clifford Asness
principal. Consultants are speculating that
long-only performance could be down around 6-8% this
month. The firm manages $10 billion in hedge funds and
$27 billion in traditional strategies.
Other quantitative managers that have been in the same
To receive email alerts or online access, call 800-715-9195.
3
AIN082007
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Page 4
Alternative Investment News
www.iialternatives.com
August 20, 2007
U.S. News (cont’d)
boat in recent weeks include Goldman Sachs Asset
Management and Barclays Global Investors. “This isn’t about
models, this is about a strategy getting too crowded, as other
successful strategies…have gotten many times in the past, and
then suffering when too many try to get out the same door,”
wrote Asness. Asness is the founder of the quant hedge fund
and was previously at Goldman Sachs, where he founded the
firm’s flagship fund—Global Alpha, which is also experiencing
losses this month. “We strongly view that the exit of many
others from this style of stock picking represents a striking
opportunity for future gains, which we fully intend to
capitalize on for our clients,” he wrote. Asness did not return
calls seeking further comment.
MKP To Reopen Credit Funds
New York-based MKP Capital Management is reopening three
of its hedge funds, two of which are credit-focused, to investors
on Sept. 1. The decision comes as the $5 billion firm profited
from short bets on ABX, mortgage lenders and collateralized debt
obligations this summer, according to an official at the firm. The
firm seeks to increase the combined assets of the three funds to
$1 billion, and will target large institutions, pensions and
endowments globally, he added.
MKP Credit I and Credit II have roughly $500 million in
assets, and MKP Opportunity Fund has $300 million. Year-todate through July 31, Credit I has returned 23%, Credit II, a
distressed focused fund, 12% and the opportunity fund, a multistrategy, 26.2%
According to the official, the funds’ managers predicted a
slowdown in the housing market in 2006.
Gerken Lines Up Launches
San Francisco-based Gerken Capital is preparing to launch a
slew of emerging market hedge funds. The $1.4 billion hedge
fund firm is rolling out a Latin American strategy Sept. 1, a
BRIC fund next quarter and funds focused on India, Russia
and the Middle East next year. The firm sees excellent
opportunities in many emerging markets and anticipates these
will only increase in the coming years, according to Founder
Lou Gerken. “When you go to Wimbledon, why would you
focus on center court only when there are so many good
matches taking place?”
The Latin America hedge fund will include fixed income,
equity long/short and various arbitrage opportunities and will
launch with $25 million. The firm hopes to increase assets to
$500 million within three years, said Gerken. It will trade Brazil,
4
Mexico, Argentina, Columbia, Peru and Chile, excluding
Ecuador, Venezuela and Bolivia, due to their illiquid stock
markets and political risk. Joaquin Garibay will manage the fund
in Mexico City. The investment minimum is $1 million with fees
of 2/20. Credit Suisse is the prime broker.
The firm has not yet decided who will manage the other
funds, but Gerken said managers will be local—the India
fund’s manager will be in Mumbai, Russia’s in Moscow and
the Middle East’s in Dubai. Only the BRIC fund will be
managed from the U.S.
Gerken manages a Greater China fund, invested primarily in
China, Hong Kong and Taiwan. It has $50 million assets and
returned 30% this year through July 31. Gerken founded the
firm in 1989.
Rhombus To Launch Best Ideas Fund
New York’s Rhombus Capital Management is seeking outside
investments for its best ideas fund, Dark Horse, expected to roll
out by the end of the year. The strategy, which launched
internally last fall, is managed by David Fiszel, managing
partner.
“We wanted to see what a portfolio of just his favorite ideas
would look like,” said Sarah Simon, director of business
development. The fund will have wider price targets and longerterm investment periods than the firm’s flagship long/short
hedge fund. Simon said Rhombus is in the process of raising
$100 million for the new fund.
The fund will charge a minimum of $1 million with a $1.5
% management fee and 20% incentive fee.
U.S. Search Digest
Texas Christian University’s $1.2 billion endowment will examine
its exposure to hedge funds over the next six-to-12 months. The
school has a 17% target to hedge funds but has an actual allocation
of 20%, which is likely to increase to 22-23%...The Edna McConnell
Clark Foundation Considering is considering further diversification
of its private equity portfolio, both in funds of funds and direct investments…Oregon Public Employees Retirement System will
increase allocation its private equity allocation to 16% from 12% as it
seeks to increase returns…New Mexico Educational Retirement
Board is considering increasing its 5% exposure to hedge funds as
part of an asset allocation study.
Sources: AIN sister publications Money Management Letter, Foundation & Endowment
Money Management and iisearches.
©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.
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8/9/07
12:01 PM
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AIN082007
8/16/07
6:08 PM
Page 6
Alternative Investment News
www.iialternatives.com
August 20, 2007
European News
Stenham To Open Up In Brazil
Stenham Asset Management, the wealth management firm that
manages $2.2 billion in funds of hedge funds, is planning to
open a Sao Paulo office in the next three to six months. This will
be the firm’s first South American outpost. Harry Wulfsohn,
director in London, said the firm will set up a marketing effort
from the office, with which to target investors in the region.
The Sao Paolo office will initially be staffed by just one
marketer and the firm is in the process of hiring for this role,
said Wulfsohn. Stenham plans to grow the office over time, he
added. Though the initial focus will be on promoting the firm’s
range of funds, a research unit is likely to be added to focus on
Brazilian managers, said Wulfsohn.
Aside from London, Stenham also has offices in South Africa,
Switzerland, the Channel Islands, Israel and the Netherlands,
with additional representation in Australia.
Homm Dodges Brunt Of Market
Sell-Off
Absolute Capital Management, the hedge fund firm co-founded
by Florian Homm, avoided losses in most of its funds during
July by assuming more defensive positions in the face of a sell-off
in financial markets. Most of the Palma de Mallorca firm’s funds
made slight gains in July. The best performer was the Absolute
India Fund, up 1.63% for the month. Across the firm’s strategies,
some holdings “were hit particularly hard” beginning in May,
according to an email commentary written by Homm to
investors. ACM closed some positions “as we became more
cautious and adopted a defensive stance during June and July.”
Homm could not be reached.
Of ACM’s 10 funds, two lost money last month: the Absolute
Germany Fund dropped an estimated 1.84% and the Absolute
Activist Value Fund took a 73 basis point hit. ACM had
anticipated a down month for the German fund as it has
maintained a 20-30% net-long bias, reflecting the firm’s positive
outlook for the country. The activist fund made its first loss
since launching last year, but Homm argues that his attempts to
protect the portfolio were effective: “We believe that many other
activist funds might have experienced more serious losses in
July,” he writes.
“Volatility in financial markets can be a good thing, if you
exploit it wisely and to your advantage,” observes Homm’s
email. “The key is not to get too carried away, and to not have
excessive exposure levels either way.” ACM avoids market calls,
which “rarely work consistently,” preferring to focus on
company and sector selection, Homm explains. “This is mission
6
critical—if we focus on this task, and execute professionally, it is
actually the case that this market environment suits us better
than a rampant bull market.”
German Firm Preps L/S U.S. Fund
Frankfurt-based Nauerz & Noell, with €100
million under management, will launch a
U.S. long/short equity fund in the next two
months. The NN Advanced LS Equity (U.S.)
fund will be the firm’s second single-strategy
hedge fund, following a managed futures fund
that launched in 2005, according to CEO
Georg Nauerz
Georg Nauerz. U.S. equities and managed
futures were both important strategies for Nauerz when he
previously managed money for private clients, he explained.
The firm is taking part in a road show to find seed clients and
is targeting U.S. institutional investors. Nauerz explained that
strict tax requirements demanded by the German regulator make
it hard to market to investors in his own country. The firm also
believes there is more appetite for U.S.-focused strategies from
U.S. investors. It is aiming to launch the fund with €10 million,
of which around €2 million will be firm money. The firm has
been running the strategy in-house for three years, with
annualized returns averaging 24%, Nauerz added.
The fund will charge 1.8/20 fees with a high watermark. The
minimum investment will be €100,000. The fund will hold
around 100 liquid, short-term positions and as such Nauerz said
he does not anticipate any capacity constraints.
SSgA To Launch European
130/30 Fund
State Street Global Advisors plans to launch a ‘short-extension’
European equities fund in the fourth quarter to complement its
existing “Edge” strategies, which have a total of $10 billion under
management globally. Designed as a FCP vehicle under the
UCITS III regime, the SSgA Europe Dynamic Edge Fund was
set up to give investors access to the European market as SSgA’s
Europe Alpha Edge Fund is at capacity. The fund is aimed at
institutional investors and will target active returns 4-5% above
the MSCI Europe benchmark, said Susanne Willumsen, head of
European active equities.
Portfolio manager Ciprian Marin will manage the fund
together with the U.K. active equity team, which reports to
Willumsen. The fund needs €20 million minimum seed
capital, which is likely to be provided by an undisclosed
Finnish pension fund.
©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.
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8/8/07
4:31 PM
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AIN082007
8/16/07
6:08 PM
Page 8
Alternative Investment News
www.iialternatives.com
August 20, 2007
Private Equity News
Film Fund Targets Nonprofits
Partisan Media Group is seeking to raise $50 million for an
independent film private equity fund and is pitching the offering
to foundations and endowments. The New York and Los
Angeles-based firm is marketing the fund to nonprofits because
the Barbarian Films fund is a global non-correlated investment,
explained Aaron Kaufman, managing member.
Traditionally, foundations and endowments have eschewed
film funds because of the increased levels of risk, said Kaufman.
Unlike most film funds that invest in mainstream studio projects,
the fund will invest in independent films with budgets of less
than $10 million. Partisan will mitigate risk by establishing
estimates for foreign sales, working only on projects that have
foreign pre-sale estimates of 80% or more of their budgets, he
added. The films will have international appeal based on the
actors selected for projects, such as Powder Blue, which recently
began filming with Ray Liotta, Jessica Biel and Forest Whitaker.
The firm, which is working with private equity firm
SandDollar Capital, expects to close the fund October. It will
have a five-year term and invest in around 60 films. The
investment minimum is $1 million. There is a 2% management
fee with a 20% performance fee over a hurdle of 10%.
Forsyth Adds HgCapital, Macquarie
Croydon, Surrey-based Forsyth Partners has added two new
holdings to its private equity fund of funds. Last month, the Forsyth
Global Private Equity Fund took positions in an investment trust
managed by HgCapital and a fund run by Macquarie Bank. Henry
Freeman, fund manager, said the fund invests in 13 managers.
HgCapital was formerly Mercury Private Equity, which was
acquired by Merrill Lynch in 1997 and subsequently bought and
renamed by Mercury staff in 2000. The London-listed
HgCapital Trust invests primarily in European small- and midsized companies: “an area in which deals should not be as
adversely affected as the mega-cap buyout market in the current
environment of risk re-pricing, as the deals do not involve
swamping credit markets with billions of dollars,” according to
an investor document. Forsyth was also attracted to HgCapital’s
“long and successful track record through varying types of market
environment,” it says.
Forsyth has also added the Macquarie Global Private Equity
Securities Fund. The fund invests across all regions, industries and
sizes of company, notes the investor letter. It does not indicate
what percentage of the fund of funds’ portfolio is held by either
new position.
Forsyth’s fund launched Dec. 1 and invests in a concentrated
portfolio of listed private equity companies and related securities.
8
It lost 3.7% in July but remains up 3.27% for the year. At July
31 the fund allocated 59.2% to Europe, 21.6% to the U.S.,
7.6% Asia Pacific and 4.3% to emerging markets.
ORIX Venture Finance
Hires Principal
The venture capital arm of Dallas investment bank ORIX USA
has hired Jeffrey Bede as principal in its Washington, D.C.,
office. Bede will work alongside Henry O’Connor, principal,
providing enterprise financing to mid- and late-stage companies.
A spokeswoman did not comment by press time.
Bede was previously managing director of Chessiecap, a
boutique investment bank, where he headed its private placement
and valuation practices. He was also a co-founder and principal at
Capital Run, a Seattle-based boutique investment bank,
specializing in providing private equity, debt, and M&A advisory
services and held investment banking positions with Prudential
Securities and Donaldson, Lufkin & Jenrette, among others.
Mid-Market Firm Shopping
Five Companies
The Riverside Company is in the process of exiting at least five
companies. Bela Szigethy, founder and co-ceo, declined to name
the companies or say how close Riverside was to closing any sales.
Riverside, which manages close to $2 billion with 14 offices
around the world, has been on a torrid deal pace. The lower
middle market player has wrapped 24 deals—19 acquisitions and
five exits—so far this year. It expects to surpass the 26
acquisitions it made 2006, according a spokesman. It has 60
companies in its portfolio with more than 11,000 employees.
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©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.
AIN082007
8/16/07
6:08 PM
Page 9
August 20, 2007
www.iialternatives.com
Alternative Investment News
Under The Hood: AIN’s look inside hedge fund strategies
Calif. Start-Up Breaks Even On Long
Energy Bets
in trouble are the ones that use leverage.” Keenan runs the fund
with partner Jeremy Olen (iiatlernatives.com, 4/20).
Sacramento, Calif.-based Stowe Partners, a hedge fund firm
founded by a former geologist, has avoided the carnage caused
by the credit crisis by taking long bets in oil service companies,
refineries, natural gas, and water-related investments. The fund
began trading on June 1, and through July 31 was able to break
even with 0% returns.
Founder Michael Keenan admitted he was mildly disappointed
with the returns. “Obviously, the desire is to be positive,” he noted.
But market conditions have been difficult. “It’s a heck of a time to
launch a fund [with] extreme volatility back and forth,” he noted.
In addition, he has gone long transportation stocks, which he
said are correlated to the oil sector. He is short the S&P 500 index,
but was seeking to gain slight long exposure as AIN went to press.
Keenan is surprised that two of the major commodities his
fund invests in—gold and silver—are flat considering inflationary
pressures. “I’m puzzled by it,” he said. “[But] the market is what it
is. It’s not going down, but it’s not really going up.”
He has avoided leverage so far, since most of the “hedge funds
Long Vol Bets Pay Off For Conquest
New York’s Conquest Capital Group returned 11.57% in its
macro strategy last month as volatile financial markets played
into the firm’s hands. “The way we made our money was by
being long volatility,” said Marc Malek, managing partner.
Each of the fund’s three sub-strategies—counter-trend,
short-term, and trend-following—was profitable, with 90% of
the returns coming from foreign exchange, fixed-income, and
equity indices, according to the firm’s letter to investors. Of
these three sectors, foreign exchange was the most profitable,
contributing 5.16%.
The firm has been anticipating a major dislocation in world
financial markets since at least February, when it told investors to
expect “significant pressure” on equities, due to a mispricing of
risk (iialternatives.com, 3/9). But July’s events were just the
beginning, Malek predicted. “As this sort of situation evolves, it’s
going to set in motion large movements in the market,” he said.
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AIN082007
8/16/07
6:08 PM
Page 10
Alternative Investment News
www.iialternatives.com
August 20, 2007
MANDATE SCOREBOARD
The table below shows new allocation commitments gained by alternative managers year-to-date through Aug 15.
2007 Tally
Firms Hired
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
19
20
21
22
23
24
25
26
29
30
31
32
33
34
35
36
37
41
42
43
44
45
46
50
51
52
53
54
55
56
57
58
CVC Capital Partners
Carlyle Group
Lehman Brothers
Hellman & Friedman
Pantheon Ventures
Apax Partners
Avenue Capital Partners
Silver Lake Partners
Bridgewater Associates
OCM Opportunity Fund
Apollo Capital Management
AlpInvest Partners
The Blackstone Group
Grosvenor Capital Management
Gottex Asset Management
Warburg Pincus
Brigade Capital Management
Crestline Investors
New Mountain Capital
Kelso Investment Associates
Kohlberg Kravis Roberts & Co.
AQR Capital Management
EnTrust Capital
Coller International Partners
MatlinPatterson Asset Management
PAI Management
Access Capital
Pacific Corporate Group
Lexington Partners
Morgan Stanley/Frontpoint Partners
GMO
KRG Capital
Partners Group
Texas Pacific Group
K2 Advisors
Aquiline Holdings
Baring Asset Management
Fortress Investment Group
Grove Street Advisors
Platinum Equity
Goldman Sachs Asset Management
Mariner Investment Group
Providence Equity Partners
Fauchier Partners
Gores Group
D.E. Shaw
MHR Institutional Partners
PIMCO
ValueAct Capital Management
Portfolio Advisors
BlackRock
Thomas H. Lee Partners
Capital International
TCW Group
Energy Capital Partners
Stark Investments
AXA Rosenberg
Green Equity Investors
Week of Aug. 13
Wins
Total*
4
11
9
7
9
7
8
6
3
7
2
1
10
4
6
3
1
1
5
5
5
3
26
2
7
1
1
1
2
6
4
2
4
4
2
2
1
1
1
1
5
2
5
3
3
1
1
1
1
4
3
4
3
2
1
3
1
3
1492
1271
1231
1110
950
911
910
850
850
768
700
676
601
540
538
525
500
500
495
480
470
469
463
450
445
400
400
400
380
379
379
375
369
350
340
300
300
300
300
300
297
285
270
265
250
250
250
250
250
246
246
245
245
220
220
218
212
205
Client
Asset Type
Amount*
Korea Life Insurance
Private Equity
30
Teachers Retirement System of the State of Illinois
Private Equity
50
Teachers Retirement System of the State of Illinois
Private Equity
300
Teachers Retirement System of the State of Illinois
Private Equity
250
Mass. Pension Reserves Investment Management Board
Korea Life Insurance
Private Equity
Private Equity
125
30
Indiana State Teachers Retirement Fund
Private Equity
120
*in USD millions
For further information, including identities of the institutions and RFP contacts, please visit iisearches.com or contact Keith Arends at 212-224-3533 or [email protected].
10
©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.
AIN082007
8/16/07
6:08 PM
Page 11
August 20, 2007
www.iialternatives.com
Alternative Investment News
Data Zone
PERFORMANCE SNAPSHOT: LONG/SHORT HEDGE FUNDS
The table below displays some of last month’s top performing long/short managers, according to data
provided by Eurekahedge.
Fund
China Alpha II Fund
Golden China Fund
QAM Asian Equities Fund
FAMA Futurewatch I FIA
China ABH Shares Fund
Acru China + Absolute Return Fund
Quest Acoes Fia
Mellon Income FI Açoes
HG Strategy II
FAMA Challenger FIA
Odey European Inc (EUR)
PilotRock Investment Partners
PharmaInvest Fund
MCT Special Opportunities Fund
ARX FIA
GAM European Small Cap Hedge USD Open
Adelphi European Small Cap Fund
Brummer & Partners Futuris Hedge Fund
FIDES Long Short Plus FIM
European Absolute Return Fund (EUR)
Modern Capital Fund
The Preservation Trust
American Crescendo Fund - USD
Manager
China Alpha Investment Management
Greenwoods Asset Management
Quant Asset Management (Singapore)
FAMA Investimentos
Value Partners
Acru Asset Management
Quest Investimentos
Mellon Global Investments Brasil
Hedging Griffo Asset Management
FAMA Investimentos
Odey Asset Management
PilotRock Investment Partners GP LLC
GEM Global Equities Management
Valartis Asset Management
ARX Capital Management
GAM International Management
Adelphi Capital
Futuris Asset Management
Fides Asset Management
Henderson Global Investors
Modern Capital Management
JCClark
Threadneedle International
Region
Asia
Asia
Asia
Latin America
Asia
Asia
Latin America
Latin America
Latin America
Latin America
Europe
North America
Europe
Europe
Latin America
Europe
Europe
Europe
Latin America
Europe
North America
North America
North America
July ‘07
Return
7.02
17.01
12.10
10.83
11.74
10.34
4.80
3.51
2.73
1.36
1.56
0.63
-12.52
2.79
1.28
0.34
-1.01
1.84
5.71
3.35
5.60
5.28
6.06
‘07 YTD
return
88.80
64.97
57.79
57.24
53.61
52.00
40.02
33.77
31.07
27.74
26.32
24.82
24.64
24.62
24.50
24.49
24.19
22.82
22.76
22.47
22.32
22.29
22.16
2006
return
76.08
92.42
12.10
24.63
86.91
26.45
72.26
42.99
35.61
48.18
-1.46
9.53
37.54
39.74
40.67
15.18
10.02
6.25
27.60
6.20
19.30
10.45
14.66
Annualised
Std Deviation
19.86
17.96
19.36
25.08
27.08
11.91
17.92
21.07
29.44
30.28
14.39
9.66
63.42
16.03
26.47
9.02
18.24
14.34
6.25
11.27
9.10
16.71
7.86
Sharpe
Ratio
1.84
3.49
1.53
1.35
1.33
2.17
3.99
1.86
1.06
0.73
0.71
1.45
1.37
2.74
1.35
1.77
1.45
1.20
4.49
1.69
2.07
0.67
2.21
AuM
(US$ Mln)
100
604
58
117
435
343
18
139
113
153
710
244
252
55
178
208
392
455
69
611
74
53
283
Eurekahedge Commentary: Long/Short Hedge Funds
July was a healthy month for long/short equity managers, with the Eurekahedge Long / Short Equities Hedge Fund Index returning 1.8%. In the underlying markets, equities did well for the first
three weeks of month, while the last week saw a major unforeseen sell-off in equities across Europe, North America, Latin America and parts of Asia (due to a credit scare caused by worries
centered on subprime lending in the US).
As for region-wise performance, Asian long/short managers returned 3.4%, with strong gains from Asia ex Japan (5%), as markets in China, Taiwan and Korea (where managers largely
benefited from long positions), proving resilient to global turbulence, ended the month strongly positive. Latin American managers fared well too (2.6%), despite facing value erosion in equities
during the last week, as markets rallied strong during the rest of the month. On the other hand European and North American long/short equity funds returned -0.8% and -0.5% respectively,
since equities (in their respective regions) took a hit (FTSE -3.7% and S&P 500 -3.2%) owing to wider credit spreads and rising risk aversion.
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AIN082007
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Page 12
Alternative Investment News
www.iialternatives.com
ANDOR VETS
Living On The
Hedge…
(continued from page 1)
according to a cap intro document. At Andor, Nakahara oversaw
investments in Japan, Korea and Taiwan, while Sun was
responsible for investments in the U.S. and Greater China. Sun
declined to comment.
—Suzy Kenly
ODEY OPENS
(continued from page 1)
of sales and marketing. The strategy returned
37.84% in the first 12 months after its June
2006 inception.
Helm said Patel’s fund is likely to have a
more limited capacity than its other hedge
funds: he suggested that it will likely not grow
beyond $100 million from its current $18
Crispin Odey
million.
The fund charges 1/20 fees and has a $100,000 investment
minimum and will target private banks, family offices and
smaller investment management companies, rather than large
institutional investors. Odey set up his firm in 1991 and is one
of the best-known hedge fund managers in London.
—Robert Murray
INVESTORS STAYING
(continued from page 1)
according to Orin Kramer, chairman of the State Investment
Council. “I have a high regard for Cliff Asness, and regardless
of the performance last week, I will continue to have a high
regard for Cliff Asness,” said Kramer of the managing
principal of AQR Capital Management, which was down
13% in its quant hedge fund at the end of last week. New
Jersey is not directly invested in AQR.
“Pension plans are not knee-jerk, they are
patient,” said Stephen Nesbitt, ceo of
Cliffwater, which advises institutional
investors on their hedge fund investments.
Some clients have suffered losses, but are
starting to earn their money back this week,
he added. “This is driven by technical
Stephen Nesbitt
liquidity, where if you can hold steady
through the turbulence,” you’ll be better off, said Dubrovay.
“When people start selling during panics, they only end up
making back half of the return,” he added. Many of the hedge
funds that were down last week are already breaking even this
week, Dubrovay said.
—Anastasia Donde
12
August 20, 2007
An occasional column by Logan Short,
an astute industry observer. He can be
reached at [email protected].
It’s scary how certain Wall Street rumors
end up eventually ringing true. Not long ago, Goldman Sachs
was called the world’s biggest hedge fund as a tongue-in-cheek
comment on some of its business operations. Then last year
AIN sister publication Alpha discovers that Goldman actually
does manage more hedge fund assets than anybody else. Or
take Alan Greenspan. Remember how whenever he flooded
the market with cash, it was whispered that he was secretly—
or not so secretly—working for the investment banks? Now
Greenspan actually is working for an investment bank—he was
hired by Deutsche Bank earlier this month. The truth, as they
say, is stranger than fiction.
Quote Of The Week
“To be hurt in currencies, interest rates and stocks would have
been unpleasant. But to lose 5% from crops and 2.5% from
livestock is the icing on the cake.”—Colin Lloyd, head of
investor relations at Mulvaney Capital Management, on the
fund’s worst-ever monthly return, which occurred last month (see
story, page 2).
One Year Ago In Alternative Investment News
Pirate Capital, the activist hedge fund firm managed by
Tom Hudson, was facing draw downs after negative returns
dropped assets from a peak of $1.87 billion at the end of
March to $1.5 billion. [It turned out to be just the start of
the firm’s troubles. Last fall, assets fell to $1.56 billion, then
to $1.1 billion in April. The bleeding has continued in
2007, as the firm was down to an estimated $400 million by
June 30.]
Five Years Ago
Under President Joel Katzman, JPMorgan Alternative Asset
Management boosted assets to $4 billion from $2.6 billion.
[Katzman headed the group as it increased its assets to $9
billion by April 2005, when he retired. He is now a private
investor and consultant to hedge funds, and speaks at several
conferences a year.]
©Institutional Investor News 2007. Reproduction requires publisher’s prior permission.