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RENAISSANCE READIES LONG-BIASED STRAT
JUNE 27, 2005
VOL. VI, NO. 25
WMG Embraces Marilyn
Monroe
WMG Limited, the
London-based firm
founded by Mehmet
Dalman, is readying
two niche investments
including a photography
fund that features a collection of vintage
Marilyn Monroe prints taken by Eve
Arnold, her photographer.
See story, page 2
At Press Time
Fla. Hedge Fund Calls CDO Bounce
2
U.S. News
Ex-NASA Engineer Preps Fund
Missouri System Seeks
DKR Replacement
Morgan Stanley Sales Exec
Joins Marketer
4
4
5
European News
London Firm Expands Team
Trustees Put Off By Hedge Fund
Semantics
Liongate Eyes Sector Vehicles
5
7
7
Under The Hood
John Levin Gains On Auto
Parts Play
York Benefits From Long Positions
9
9
Renaissance Technologies, the Long Island firm run by James Simons, is readying the
Renaissance Institutional Equities Fund, its first new fund in years. It will have a $20 million
investment minimum and a capacity of $100 billion, according to an investor document.
RIEF will be a long-biased U.S. equities fund based off computer models. It is scheduled to
launch August 1.
One prospective investor expects interest to be high. He characterized the launch as, “the
Holy Grail for anybody who has been in the hedge fund business. They’ve got [many] PhDs
(continued on page 12)
Online Shopping Cart
HFR TO OFFER DIRECT INVESTMENT
IN SINGLE FUNDS
HFR Asset Management, the fund of funds giant with $4 billion under
management, is opening up its underlying platform to direct investment
for the first time. Starting July 1, investors will be able to select hedge
John Godden
funds from the platform on which all HFR’s funds of funds and indices
are built, effectively creating their own funds of funds, said John Godden, managing director
in London.
(continued on page 11)
CITADEL, GLENWOOD VETS TO LAUNCH
$2 BILLION STRATEGY
Alec Litowitz, formerly a senior member of hedge fund colossus Citadel Investment
Group, has come out of retirement to start his own firm, Magnetar, with Ross Laser,
a partner at Marin Capital Partners and formerly president of Glenwood Capital
Management. The duo is planning to launch a fund in October with $2 billion,
according to one potential investor.
Currently, Magnetar officials are raising capital for the new fund and interviewing prime
brokers. The firm is expected to make a presentation at a capital introduction meeting in
(continued on page 12)
Departments
Search & Hire Directory
10
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Inc. All rights reserved. ISSN# 1544-7596
For information regarding subscription rates
and electronic licenses, please contact Dan Lalor at
(212) 224-3045.
CREEDON KELLER TO LIQUIDATE FLAGSHIP
Redemptions and poor performance have prompted Creedon
Keller & Partners to liquidate its flagship Alta Fund. The
Sausalito, Calif., firm has seen its assets—80% of which are in
its flagship fund—plummet to $500 million from $1.5 billion
at the beginning of the year. Its convertible arbitrage funds
returned -12% year-to-date, compared to -8.6% for the Dow
Jones convertible arbitrage benchmark. The firm has temporarily
(continued on page 11)
Check www.iialternatives.com during the week for breaking news and updates.
AIN062705
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Alternative Investment News
www.iialternatives.com
June 27, 2005
At Press Time
Fla. Hedge Fund On Spot With CDO Bounce
Epsilon Investment Management’s Steve Stevanovich seems to have been on the
money with his call in late May to buy collateralized debt obligations. He used a
recent sell-off as an opportunity to raise capital for his firm by penning a letter on
May 26. In the letter, a copy of which was obtained by AIN, Stevanovich urges
recipients to invest additional capital in the Epsilon Global Value Fund III, as he
and senior members of the firm had already done.
The letter says the recent sell-off in CDO equity tranches caused by the
downgrade of General Motors’ credit created a buying opportunity. The actual
market prices of investment-grade corporate bonds are significantly higher than
the price at which one can get exposure to the same bonds through a CDO
structure. “The massive and unprecedented technical sell off in the CDO market
over the last few weeks has created exceptional opportunities for absolute
returns,” the letter says.
At the time, CDO market watchers said that even though Stevanovich’s
explanation of the sell-off is accurate, they felt his comparison of CDO equity
tranches to vanilla corporates was at best incomplete. Frits Lieuw-kie-song,
Epsilon spokesman who returned calls to Stevanovich, defended the firm’s
methodology, stating that it is only one of a number of different models used
by the fund. “In fact, our analysis is turning out to be very accurate. CDO
equity tranche prices have gone up by 19.4% since we wrote our letter,” Liewkie-song said. “Instead of the margin calls that were taking place in May,
causing managers to liquidate positions, we are now seeing the return of cash
collateral thus far in June.”
EDITORIAL
TOM LAMONT
Editor
STEVE MURRAY
Deputy Editor
DOUGLAS CUBBERLEY
Executive Editor
(212) 224-3318
MARK FARO
Managing Editor
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ROBERT MURRAY
Senior Reporter
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NATHANIEL BAKER
Reporter
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JENNIFER MCCANDLESS
Associate Reporter
212-224-3615
ELINOR COMLAY
(44-20) 7303-1738,
VENILIA BATISTA
(44-20) 7303-1718
London Bureau Chiefs
STANLEY WILSON
Washington Bureau Chief
(202) 393-0728
MATTHEW TREMBLAY
Hong Kong Bureau Chief
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JANA BRENNING, KIERON BLACK
Sketch Artists
PRODUCTION
DANY PEÑA
Director
Gentleman Prefers Blondes
LYNETTE STOCK, DEBORAH ZAKEN
Managers
WMG To Launch Real Estate,
Photography Funds
MICHELLE TOM, ILIJA MILADINOV,
MELISSA ENSMINGER,
BRIAN STONE, THEO BILL
Associates
WMG Limited, the London-based firm founded by Mehmet
Dalman, ex-head of investment banking at Commerzbank, is
readying two niche funds investing in emerging market real
estate and photography. The photography fund, already
closed to investors, is due to launch this fall, said Dalman. To
jumpstart the fund, WMG recently purchased a collection of
vintage Marilyn Monroe prints taken by Eve Arnold, her
Mehmet Dalman photographer.
Hedge fund firms have managed funds devoted to art or rare coin collections,
but WMG’s photography fund is believed to be the first of its kind. Dalman said
his fund is unique because it will provide investors a yield as well as a return on
capital gains. The yields will come from royalties paid to WMG for the photos’
reprint rights, as well as from sales of Monroe prints, books and catalogues
Dalman eventually plans to market. The annualized yield is targeted in the
double digit area, he added.
WMG is currently raising capital for the real estate fund for a launch within a
few months time, Dalman added. Its target size at launch is $100 million. The
fund will purchase land, which will then be later developed.
2
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Alternative Investment News
www.iialternatives.com
June 27, 2005
U.S. News
Former NASA Engineer To
Launch Hedge Fund
Smith Group Asset Management, the $2 billion money
management firm founded by former NASA aerospace engineer
Steve Smith, is prepping a multi-strategy hedge fund that is
expected to be launched by Aug. 1. The fund is expected to be
rolled out with about $20 million but has a capacity of $500
million, said an industry official familiar with the launch.
The strategy has been managed internally for the past two
years and is now being offered to the public, the official said. The
fund is being marketed to foundations, endowments, pension
plans and high-net-worth individuals. Kenneth Smith, director
of marketing, declined to comment, adding the firm is not ready
to talk about the new fund.
Missouri System Seeks Hedge Fund
The $3 billion University of Missouri System’s Board of
Curators plans to hire an absolute return hedge fund manager by
the end of the summer to handle $7.5 million in endowment
funds and $25 million in retirement funds. The Board recently
dropped DKR Capital over concerns about the loss of two
trading teams over the last year. “There’s been a lot of personnel
changes at the firm that concerned the board. The commodities
arbitrage trading team was eliminated and the domestic
convertibles trading group spun off from the firm,” said Nikki
Krawitz, v.p. of finance. DKR has managed these mandates since
2002. Elliot Alchek, director of marketing at DKR, did not
return calls by press time.
Tradex Global To Roll Out Fund
Tradex Global Advisors is prepping on-shore feeder versions of
its Tradex Global fund of funds for a July 1 launch. The funds—
one leveraged about 2%, the other unlevered for institutional
capital—will invest in about 100 managers employing roughly
40 strategies, said Michael Beattie, partner.
The offshore version launched Feb. 1 with $50 million.
Nearly 8% of the portfolio is allocated to managers following a
global macro strategy, 7% is devoted to mortgage-backed
securities managers, 6% to event-driven strategies and 5% to
long/short European equities. UBS’ private banking unit in
Zürich is the largest investor but Beattie declined to name
others and declined to specify how much the Swiss bank
contributed. Calls to a UBS spokesman were not returned by
press time.
Other strategies include emerging markets debt, asset-backed
4
loans, high-yield, multi-strategy Latin America, long/short
Russia/Baltics and options arbitrage. Tradex will be reallocating
funds on Aug. 1 and will reduce the fund’s global macro, MBS,
event-driven and long/short European exposure. The fund is
nearly tripling its exposure to asset-backed loans, from 1.5% to
4%. It is also adding managers in high-frequency trading
strategies, Eastern European debt, South African equities and
convertible arbitrage.
San Francisco Firm Preps Fund
North Stone Capital Management is planning to launch a
systematic global macro fund, North Stone One, July 1. The fund
will trade G4 currencies against the U.S. dollar, said an industry
official familiar with the San Francisco firm.
The fund, which will have a minimum investment of
$250,000, is being marketed to high-net-worth individuals,
family offices, endowments and funds of funds. It will carry a 2%
management fee and a 20% performance fee.
Fund managers Karl Simmons and Samuel Enoka were
traveling and could not be reached for comment.
Texas Firm Readies Fund With
Cash From Dell Family
Houston-based Kenmont Investments Management is
readying a hedge fund that includes an investment from MSD
Capital, an investment firm that manages the capital of
billionaire computer mogul Michael Dell and his family. The
Kenmont Special Opportunities Fund will invest in event-driven,
distressed and capital structure arbitrage opportunities,
according to an investor presentation obtained by AIN. The
fund is expected to launch July 1 with $150 million, said an
industry official.
The firm is run by Donald Kendall, who co-managed a $500
million credit, event driven and distressed portfolio for Carlson
Capital. He also runs Kenmont Capital Partners, a private
equity fund of funds firm.
MSD’s investment was not quantified, but the investor
document described it as “substantial.” The firm’s two
managing partners, Glenn Fuhrman and John Phelan, are
also serving on an advisory committee for Kenmont.
Fuhrman was previously head of the special investments
group at Goldman Sachs, while Phelan was a principal at
ESL Investments.
The initial focus of the fund will be the electric
utility/power producer, energy and transportation industries. It
Copying prohibited without the permission of the publisher.
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will have a $5 million minimum investment and carry a 1.5%
management fee and 20% performance fee. The fund will have
onshore and offshore vehicles.
Kendall would only say that the firm is currently marketing its
fund but declined to provide additional details. Calls to Fuhrman
were directed to MSD’s legal counsel who did not respond to
inquiries by press time.
High-Yield Sales Vet Joins Hedge
Fund Marketer
Catherine Frey, previously an executive director in high-yield
sales at Morgan Stanley, has headed to Hedges Lane Financial, a
third-party consultant and marketer for alternative investment
management firms. She joins the firm as a partner in New York.
Prior to working at Morgan Stanley, which she left in February,
Frey was a managing director and high-yield saleswoman at Bear
Stearns. While at Bear Stearns, she worked with Beth Travers,
who formed Hedges Lane in January. Frey began her career as an
investment banker at Drexel Burnham Lambert and later
European News
London Firm Makes Hires
London-based hedge fund firm L.H. Ward & Co. has made two
new hires, bringing on board a chief operating officer and a risk
manager. The firm, which runs a $25 million long/short European
equity fund, is planning to make several research hires in the next
few months and will move to larger offices in about three weeks to
accommodate this growth, said Lorenzo Ward, founder.
The firm tapped Scott Wade last month as chief operating
officer. He was previously a partner responsible for the financial
side of the consultancy at HedgeSupport, a London-based firm
which advises start-up hedge funds. Prior to his arrival, L.H.
Ward outsourced its operational activity, said Wade. “Now we
have sufficient funds under management…it makes sense to bulk
up the infrastructure. It’s an ideal job for me…to not only look
after the operational side but also help run the business,” he
continued. A HedgeSupport official confirmed Wade’s departure
last month.
Rocio Perez-Ochoa has joined L.H. Ward this month as risk
manager. Prior to coming onboard she was on maternity leave,
and before this was responsible for portfolio construction and
risk analysis at Mako Investment Managers, working on a
long/short market neutral equity portfolio, said Ward. A Mako
official confirmed her departure. Perez-Ochoa was out of the
office and could not be reached.
The firm has lined up a couple of potential analysts, one of
whom is currently working for an investment bank, said Ward,
Alternative Investment News
Donaldson Lufkin & Jenrette.
Frey noted how after 14 years as a saleswoman, she was ready
for a change and left Morgan Stanley earlier this year. Travers
added Frey brings extensive experience in the high-yield,
distressed and credit derivatives space. And, she said, the hedge
fund space has a need for marketers with this kind of background.
Advent Adds Marketer
Advent Capital Management, a $4 billion New York-based
manager of hedge funds, mutual funds and separate accounts,
has hired Tim Malloch as a managing director of marketing
and business development. Malloch joined the firm from
Westridge Capital Management where he was a director of
business development.
Malloch said his position is a new one that was created
because Advent is scaling up its marketing effort. Malloch said he
decided to join Advent because he thought the firm has a
successful and sustainable platform and was excited to be part of
the team. Jim Carter, president of Westridge, was out of the
office and could not be reached.
declining to elaborate. The firm is looking to grow its research
effort over the summer, to broaden and deepen its coverage of
the European markets, he said.
The firm has a headcount of five and is based in Limehouse,
in London’s East End. Ward said he has found new premises in
Old Burlington Street, in the capitol’s hedge fund district.
“Gravity pulls us back to Mayfair,” he quipped, explaining that
he wants to be seen as more accessible to investors.
RAB Lines Up Energy Manager
London-based RAB Capital, the listed hedge fund firm which
manages roughly $2 billion, has lined up a senior addition to its
energy team. The new hire will co-manage the RAB Energy Fund
and the RAB Octane Fund, a more concentrated version of the
energy vehicle, with existing manager Gavin Wilson, said
Michael Alen-Buckley, co-founder and executive chairman. He
declined to identify the new co-manager until the individual has
joined RAB. The hire has “an analytical bent” and will come
onboard very soon, he added.
RAB looks for niche areas in which to develop a range of
funds, and seeks out strategies in which there is a limited amount
of competition. “The commodity space is a very important area
for us,” said Alen-Buckley of the decision to grow the energy
team. A third fund in this area, the RAB Commodity/Energy
Fund, is managed by Thomas Leaver and Philip Turner.
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5
HF Industry Awards
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Trustees Struggle To Understand
Hedge Funds
Pension fund trustees still find themselves struggling with the
difference between the concepts of hedge funds and global
macro strategies. In a recent panel discussion at the Strategic &
Tactical Asset Allocation European Forum in Amsterdam,
delegates heard that trustees are interested in global macro
strategies but still cringe at the mention of hedge funds, when
in fact global macro is a type of hedge fund strategy, said David
Tucker, director of marketing and client service at Tactical
Global Management.
Carolina Minio-Paluello, executive director, quantitative
resources at Goldman Sachs Asset Management, a speaker at
the conference, said there is a terminology issue. “Trustees still
think hedge funds are dangerous for a lack of liquidity and a
lack of transparency,” she added. The manager markets its global
macro fund not as a hedge fund but as a global tactical asset
allocation strategy to get investors interested. TGM has a similar
pattern in which it uses two separate presentations when
marketing to different potential clients—as a hedge fund for
funds of funds and as a global tactical macro strategy for pension
funds, Tucker explained.
Robert Kiernan III, ceo at Advanced Portfolio Management,
who was chairing the panel, said trustees would need extensive
training on alternatives from both fund managers and investment
consultants to overcome the difficulties of understanding the
several types of hedge fund strategies.
Liongate Readies Sector Funds
Liongate Capital Management, the London-based fund of
hedge funds firm, is planning to launch sector-specific funds in
around September. The firm also intends, around the same time,
to establish distribution agreements for its existing multistrategy fund of funds, which topped hedge fund databases last
year with performance for April-December of 22.49%,
annualized at 31.06%.
The firm is likely to launch two sector-specific funds,
although which particular sectors will be targeted has not yet
been finalized, said Jeff Holland, partner. Liongate has a list of
approved managers with which it does not invest because to do
so would overweight the multi-strategy fund too much in one
area. Launching sector funds will allow the firm to invest with
these managers, alongside relevant managers that are already in
the main fund. The sector funds will also hopefully appeal to
potential investors who are looking for more focused funds of
funds, added Holland.
Meanwhile, the firm is talking to various large banks about
distributing its flagship fund of funds across Europe and the
Alternative Investment News
U.S., said Randall Dillard, partner. No agreements have been
signed but several banks have shown interest, he said. Access
to the Liongate fund will likely be made available via
structured products.
The multi-strategy fund holds around $147 million, which is
$100 million more than when it was first opened to new
investors early this year (iialternatives.com, 2/3).
Danish Firm Eyes Close Next Year
Copenhagen-based Carnegie Asset Management is anticipating
closing its long/short equity fund, with inflows indicating that its
€500 million capacity will be reached within 12-18 months.
“The fund’s growing quite rapidly now,” said Andreas
Tholstrup, fund manager, putting this down to performance.
The fund returned 19% in 2004 and is up 10.5% this year to
date. It is expected to hold €200 million at the end of this
month, compared with €160 million at the end of May. The
fund has been receiving roughly €20 million per month this year,
he continued.
The Luxembourg-domiciled fund has family office and highnet-worth investors in the Nordic countries, as well as
Switzerland, Holland and the U.K., said Tholstrup. It has a
€10,000 investment minimum. The firm has never marketed the
fund aggressively but makes a trip once a month to either
Switzerland or the U.K., he added. The speed with which the
fund reaches capacity will depend on performance, he said.
Tiburon Plans To Close Asia Fund
London-based Tiburon Partners expects to close its long/short
Asia ex-Japan fund this year. The Tiburon Tiger Fund holds
$86 million. It has a capacity of $250-300 million but will be
soft-closed at around $200 million, said Mark Fleming, who
manages the fund. “We’re expecting some rather large tickets
coming up…from people on the cusp of making an
investment. We’re confident we can get up to the soft-close
during the second half of this year,” he ventured.
Investors in the Tiger fund include funds of funds, private
banks, family offices and high-net-worth individuals, added
Ivo Coulson, director of U.K. equities at the firm. Once the
$100 million-mark has been reached in the next few months,
the firm expects assets to grow rapidly as existing investors
scale up their allocations, he said.
Separately, Tiburon opened its second fund to external
investors for the first time in March (AIN, 4/11). The Tiburon
Thoroughbred Fund is a U.K. long/short equity fund that holds
£3.5 million. The firm is not making a big push for new
investors but hopes to receive assets from existing investors in the
Asia ex-Japan fund who are looking for U.K. exposure, he said.
Copying prohibited without the permission of the publisher.
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AIN062705
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Alternative Investment News
Under The Hood: AIN’s look inside hedge fund strategies
CTA Shorts Euro, Flips Heating Oil
Long Plays Boost York
Hill Financial Group, a commodities trading adviser in
Rowayton, Conn., profited from an uncharacteristic 10-day short
position it took on June euro futures, as well as on an overnight
long position on June heating oil contracts. The euro position was
taken on May 5 when the June contracts were trading at 1.2942
to the U.S. dollar, said Chris Hurd, head trader. “The
program…stayed short for the next 10 trading days until our
internal stop was hit at 1.2643,” he noted. “This holding time is
long for the parameters of the program,” he added. On May 9,
Hill entered into a long position in June heating oil contracts at
158.8 and got out the next trading day at 161.7, added Hurd.
The firm’s Hill Global Fund aims to capture short-term price
movements in 17 futures instruments through a proprietary
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applying algorithms to these futures on both the long and short
side. Volume, volatility and price movements are analyzed to
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methodology is extremely short-term in nature and utilizes
counter trend and momentum analysis. Positions are held for an
average of two to six days.
York Capital Management’s newest fund, an event-driven vehicle
focused on European securities, has capitalized on its three largest
holdings, Vivendi Universal, Allied Domecq, and Siemens, to
boost its year-to-date returns to 6%. The $400 million York
European Opportunity Fund is managed by Christophe Aurand
from the firm’s London office. Calls to Aurand were not returned.
The fund has been adding to its position in Vivendi because
the French company’s restructuring has divested certain assets,
making its actual value greater than the price at which it is
publicly traded, said an official familiar with the fund. The
Vivendi stake represents 5% of the portfolio and is the fund’s
largest holding.
Its position in Allied Domecq, taken this year, was the classic
long part of a merger arbitrage play. The spirits company is due
to be acquired by French beverage giant Pernod Ricard. The
Siemens investment, meanwhile, was made because the fund
views the German company to be trading at a price that is lower
than its actual value, the official said. Allied Domecq and
Siemens each correspond to 4% of the portfolio’s holdings.
John Levin Makes Visteon Play
John A. Levin & Co.’s Levco Debt Opportunity Fund was up 40
basis points last month and had exposure to auto parts supplier
Visteon Corp. Visteon, which spun off from Ford Motor
Company, was heading toward bankruptcy unless it restructured
an agreement with its former parent. “During May, we began
purchasing a position in the company’s senior notes maturing in
2010 and 2014 that were trading in the 60s, and shorting some
notes coming due in August, trading in the mid to high 90s,”
according to an investor letter obtained by AIN. Last month the
two companies announced an agreement more favorable to
Visteon than expected, causing the paper to trade up and the
fund exited its position.
The fund also had positive gains from its long position in
MCI senior notes. The paper traded up in May because Qwest
Communications International formally decided to end its
pursuit of MCI, which was set to be acquired by Verizon
Communications. Prior to this, MCI debt was priced with
uncertainty because of the possibility Qwest would snag the
company away from Verizon, according to the letter. With the
possibility removed, MCI notes began to trade closer to
Verizon’s credit spread. Stuart Kovensky, portfolio manager,
declined to comment.
U.K. Firm Cuts Exposure
Rickmansworth, Hertfordshire-based Fundamental Asset
Management has redeemed some winning long positions in its
£2.1 million Chess River U.K. Equity Fund to reduce gross and
net exposure in a tough time for the strategy. The fund was
down 1.35% in May. It was 104% invested at the start of the
month but this was dropped to 91%—75% long and 16%
short—by the end of May, with a net exposure on a cash basis
of 59% long. “We’re finding, in this marketplace, that we’re not
going to stick around for the last percent,” said Chris Boxall,
co-founder.
A core position in Robert Wiseman Dairies was among the
losses, with the company losing a £40 million annual milk
contract with William Morrison Supermarkets. Shares fell by
11% early in May. Wiseman also reported a 15.3% decline in
full-year pre-tax profit. Fundamental dropped its position, which
had been about 3% of the fund. “There are bigger fish for us to
hunt for, so why get stuck when there’s so much uncertainty?”
Other losing positions were retained, including a 2-3%
position in Vitec, which supplies equipment to the
broadcasting and entertainment industries. It fell by 10%
despite trading for the first four months of the year in line with
expectations. “We think the market reacted badly to a quite
encouraging announcement,” said Boxall.
Copying prohibited without the permission of the publisher.
9
AIN062705
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Page 10
Alternative Investment News
www.iialternatives.com
June 27, 2005
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, Nathaniel Baker 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
Total
Type
Amt (Mlns)
Foundation
USD4,500
Fund & City
John D. & Catherine T.
MacArthur Foundation, Chicago, IL
Road Carriers Local #707
Pension Fund, Hempstead, NY
Union/
USD328
Multiemployer D.B.
Assignment
Global/Alternative/
Hedge Fund
Mandate
Size
(Mlns)
USD405
Consultant
Cambridge Associates/
Boston, MA
Comments
Plans to double its 9% hedge fund allocation.
No timeframe for searches.
US/Alternative/
Hedge Fund
N/A
Gerald Chasin/Morgan
Stanley Investment
Consulting/New York, NY
May invest in hedge funds to boost returns. Will
discuss at its two-day meeting in August.
Salt River Project, Phoenix, AZ
Corporate D.B.
USD782
Global/Alternative/
Hedge Fund
N/A
Unknown/
Getting educated on hedge funds and private
equity, although it has no immediate plans to
invest in these asset classes.
Salt River Project, Phoenix, AZ
Corporate D.B.
USD782
Global/Alternative/
Private Equity
N/A
Unknown/
Getting educated on hedge funds and private
equity, although it has no immediate plans to
invest in these asset classes.
Public D.B.
USD1,500
Amanda Capital,
Helsinki, Finland
Money
Manager
AP Pension, Copenhagen,
Denmark
New Searches
New York City Board of
Education, New York, NY
US/Alternative/Private
Equity Fund-of-Funds
USD60
Mellon, Human Resources
& Investor Solutions/
New York, NY
Seeking exposure to a diversified pool of
private equity funds across various strategies
and vintage years. RFQ is available at
(http://www.comptroller.nyc.gov).
Deadline is July 1, 2005.
EUR100
Global/Alternative/
Private Equity
EUR75
None
Mandatum Asset Management will invest in
private equity funds on behalf of Amanda
Capital until 2007.
Corporate
D.C.
DKK20,000
Global/Alternative/
Private Equity
N/A
None
Fund will not be looking at private equity for at
least the next 12 months.
Los Angeles City Employees
Retirement System (LACERS),
Los Angeles, CA
Public D.B.
USD8,400
US/Alternative/
Private Equity
USD10
Hamilton Lane Advisors/
Bala Cynwyd, PA
Considering committing to the Whippoorwill
Distressed Opportunity fund. Will make a
decision at its July 2005 meeting.
Los Angeles City Employees
Retirement System (LACERS),
Los Angeles, CA
Public D.B.
USD8,400
US/Alternative/
Private Equity
USD10
Hamilton Lane Advisors/
Bala Cynwyd, PA
Considering committing to the Yucaipa America
Alliance Fund I. Will make a decision in July
2005 meeting.
Royal Mail Pension Plan,
London, U.K.
Corporate
D.B.
GBP16,000
Global/Alternative/
Hedge Fund
N/A
Iain Woods/Watson Wyatt/
London, U.K.
No decision yet on hedge fund allocation. No
timeframe set for decision.
Telstra Super,
Melbourne, Australia
Corporate
D.B.
AUD7,500
International/Alternative/
Private Equity
Fund-of-Funds
N/A
Watson Wyatt Worldwide/
Melbourne, Australia
Has made commitments to three generalist
fund-of-funds managers and three specialist
fund-of-funds managers.
Updated Searches
Completed Searches
New Jersey Carpenters Pension
Fund, North Bergen, NJ
Union/
USD875
Multiemployer D.B.
US/Alternative/
Hedge Fund-of-Funds
USD30
Investment Performance
Services/West
Conshohocken, PA
Meridian Capital Partners
New Jersey Carpenters Pension
Fund, North Bergen, NJ
Union/
USD875
Multiemployer D.B.
US/Alternative/
Hedge Fund-of-Funds
USD30
Investment Performance
Services/West
Conshohocken, PA
Attalus Capital
New Jersey Carpenters Pension
Fund, North Bergen, NJ
Union/
USD875
Multiemployer D.B.
US/Alternative/
Venture Capital
USD20
Investment Performance
Services/West
Conshohocken, PA
Yucaipa American Funds
New Jersey Division of
Investments, Trenton, NJ
Public D.B.
USD70,000
US/Alternative/
Private Equity
USD200
Strategic Investment
Solutions/San Francisco, CA
Warburg, Pincus Asset Management
New Jersey Division of
Investments, Trenton, NJ
Public D.B.
USD70,000
US/Alternative/
Private Equity
USD75
Strategic Investment
Solutions/San Francisco, CA
Oak Hill Capital Partners
New Jersey Division of
Investments, Trenton, NJ
Public D.B.
USD70,000
US/Alternative/
Private Equity
USD50
Strategic Investment
Solutions/San Francisco, CA
Quadrangle Capital Partners
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 karends@iinews.com.
10
Copying prohibited without the permission of the publisher.
AIN062705
6/23/05
5:54 PM
Page 11
June 27, 2005
www.iialternatives.com
Alternative Investment News
trial basis,” he said. The platform offers equal levels of
transparency and liquidity across all strategies, although there
will not be a standard fee for using it in this way, since different
underlying managers charge different fees, he noted.
New York-based PlusFunds Group, which has a relationship
with Standard & Poor’s, enables investors to construct their own
funds of funds using the single managers on the S&P hedge fund
index. PlusFunds differs from HFR, however, in that it does not
undertake manager selection or offer funds of funds of its own.
—Robert Murray
HFR TO OFFER
(continued from page 1)
“At the moment, most investors are buying packaged
products. We’ve had a lot of feedback about being able to create a
[bespoke] fund of funds on a platform like this,” he continued.
The move is partly a response to the increasing sophistication of
institutional investors. “Over the past few years, they very much
needed a hand-hold,” he observed, referring to the use of passive
indices and funds of funds. But as investors gain more
experience, they are becoming more selective about what they
want to invest in, and are more capable of constructing their own
portfolios, added Godden.
HFR also expects other fund of funds firms to use the service
to structure offerings to sell in the developing onshore European
markets. This will be possible because all managers on the HFR
platform are compliant with, for example, the strict tax
requirements of the German hedge fund market, he said.
“We felt we needed to have a particular size [of assets] on the
platform already to handle the process, because money will be
moving back and forth between managers,” explained Godden.
“HFR becomes a liquidity provider here.” The firm has created
an online system that an investor can use to view all the funds
available and place an order for those funds in which it wants to
invest. “We’ve got a couple of our existing partners using it on a
CREEDON KELLER
(continued from page 1)
suspended all redemptions for the flagship fund and is planning
to return more than half its assets June 30, said Lew Phelps,
spokesman.
The firm will have another payout at the end of July and
additional payouts as it gradually exits from less liquid
investments, Phelps said. “This is not a fire sale. We are exiting
from our positions in a controlled manner.” Phelps added that
the firm is not closing and will still be running its other funds.
Creedon Keller also plans to launch a new fund at some point
after the liquidation is complete, he said, declining to elaborate.
Other high-profile hedge fund firms have also recently thrown
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B400601
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
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18
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Investor’s prior written
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The University of Texas System’s
$11.5 billion endowment
funds are
seeking to add roughly $575
million in new hedge fund
investments this
year. The funds, which are
managed by the University
of Texas
Investment Management
Company (UTIMCO), currently
have a little
over 20% of their assets allocated
to hedge funds, and the goal
a 25% allocation, said Bob
is to have
Boldt, cio. The school is leaning
towards
investing in absolute return
funds over other hedge fund
styles, Boldt
(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
Check www.iialternatives.
com during the week for
CREDIT CARD NUMBER
EXPIRATION DATE
OF FUNDS
The €8 billion KLM Pensioenfon
ds, the Amstelveen-based
pension plan for pilots, crew
members and ground staff
of
KLM Royal Dutch Airlines,
may make its first foray into
hedge funds of funds this
year. Fons Lute, cio of Blue
Sky
Group, the money managemen
t subsidiary of KLM
Pensionenfonds, said he plans
to recommend a 2-5% allocation
hedge funds of funds at a
to
board meeting in April.
(continued on page 26)
breaking news and updates.
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AIN062705
6/23/05
5:54 PM
Page 12
Alternative Investment News
www.iialternatives.com
in the towel. Marin Capital Partners decided to return its capital
to investors, as did London-based Bailey Coates Asset
Management, which runs a long/short equity strategy.
The liquidation is just the latest event for Creedon Keller.
Founder Scott Creedon and his wife, Kim held the majority of
shares in the firm, but a judge awarded the voting rights for the
shares to his wife on an interim basis as part of a divorce
proceeding (AIN, 1/10). Scott Creedon then stepped down as ceo
and cio of the firm. Creedon Keller subsequently restructured,
expanding its board to five members.
—Jennifer McCandless
CITADEL, GLENWOOD
(continued from page 1)
London this week. “The guy [Litowitz]’s a superstar…because of
the Citadel association, and the fact that he’s assembling a very
strong team, and his experience—having lived through some of
the more interesting market environments of the 90s and having
survived and thrived—it’s gonna get a lot of attention,” the
investor said.
Marin, a convertible arbitrage manager run by John Hull and
J.T. Hansen, recently made headlines when it decided to return
capital to investors. Calls to Laser and Bill Berti, a Marin
spokesman, were not returned. Litowitz could not be reached
for comment.
—N. B.
RENAISSANCE
(continued from page 1)
and they’re out in Eastern Long Island. You go there and it’s like
this campus as far as the eye can see, the buildings are wrapped
around the courtyard in an octagon…there’s no shop like that
anywhere in the hedge fund business.”
The new fund is based on much of the technology of its
Medallion Fund, which closed in 1993. “RIEF is designed to
have relatively low volatility, a relatively low beta and average
holding times in excess of one year,” according to the document.
The investment universe will consist of U.S. equities only, but
the fund may trade stock index futures to reduce risk.
RIEF offers four fees schedules.
A fixed 2% management fee;
a 50 basis point management fee and a 10%
performance fee;
a management fee of 80 basis points and 25% of net
excess over the S&P 500;
or a 50 basis point fee plus 35% of net excess over the
S&P 500.
A call to Simons was returned by Mark Silber, v.p., who
declined to comment, citing the private nature of the
investment.
—Nathaniel Baker
•
•
•
•
12
June 27, 2005
The Long and Short of It
Going Long: RAB Capital’s founders,
Michael Alen-Buckley and Philip
Richards, made a bundle last week
by selling some of their shares in the
publicly traded hedge fund concern. The
duo pocketed a cool £12.5 million each
by selling shares to some of Europe’s
wealthiest set including Sofina, the finance arm of
private Belgian chemical group Solvay, and Karrick Trust, representing the family of steel magnate Lakshmi Mittal. They
both sold 6.22% stakes but still hold more than 62% between
them. Not only do the duo benefit from a sudden inflow of
cash, they maintain their majority hold on the firm while
bringing onboard some pretty wealthy backers. Whichever way
you look at it, it’s not a bad day’s work.
Quote Of The Week
“Gravity pulls us back to Mayfair.” —Lorenzo Ward, founder of
L.H. Ward & Co., on his firm’s upcoming move from London’s East
End to the capitol’s hedge fund district (see story, page 5).
One Year Ago In Alternative Investment News
The Galleon Group launched a fund of funds designed to
manage the personal assets of the firm’s partners. [Last
December, the firm was considering whether the fund should be
opened to outside investors (AIN, 12/6). Ashwan Khanna was
hired in January (AIN, 1/17), partly to explore these options,
which are still on the drawing board.]
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