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The long and the short of it

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ISSUE 354 25 September 2014

 

MILLENNIUM-LINKED PINZ CAPITAL PLANS LAUNCH

 
  MILLENNIUM-LINKED PINZ CAPITAL PLANS LAUNCH   WHO WANTS TO BE

WHO WANTS TO BE

Matthew Pinz to lead New York’s latest event-driven launch

LAUNCH

05
05

AN SEC TARGET?

 
 
 

CREDIT SUISSE HIRES NEW EUROPEAN CONSULTING CHIEF

 

LAWYERS SAY TAKE-UP OF THE JOBS ACT’S ADVERTISING FLEXIBILITIES IS LIKELY TO BE LIMITED

Swiss bank swoops for ODD specialist Vincent Vandenbroucke

NEWS

06
06

OMNI PARTNERS LAUNCHES LONG/SHORT HEDGE FUND

 

London firm starts fourth strategy as internal offering opens up

NEWS

11
11

FEATURE

20
20

Former Caxton, Soros pro backed by JP Morgan

Hal Lehr plans 2 January start for Aithon News breaks as ‘20 for 2015’ list released

BY ELANA MARGULIES

JP MORGAN ASSET Manage-

ment is preparing to seed

Aithon Capital Management,

a new hedge fund manager

being launched by Soros Fund Management and Caxton Associates alumnus Hal Lehr. HFMWeek was first to report on Tuesday that Aithon will launch on 2 January with $100m and JP Morgan will account for more than half the initial assets. Aithon will deploy a global macro strategy within a master feeder structure, using relative value approaches across a spec-

trum of commodities and liq- uid macro instruments. It uses a proprietary investment process, called Precursors, Predictors and Events (PPE) that Lehr devised for research and risk. Lehr was a commodity trad- ing executive at Deutsche Bank until leaving at the end of 2012, before which he held positions

at Harbert Management Corp., Soros Fund Management and Caxton Associates. Upon leaving Deutsche Bank, Lehr was originally going to launch a hedge fund but decided to spend 2013 in a portfolio advi- sory capacity for Carlyle Group- owned hedge fund Vermillion Asset Management. Lehr has filled Aithon’s team with six other people he has worked with at

03
03
team with six other people he has worked with at 03 HFMWeek lists the 20 launches
HFMWeek lists the 20 launches generating the most interest among investors FEATURE 16
HFMWeek lists the 20 launches
generating the most interest among
investors
FEATURE
16

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14
14

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Combining the resources and experience of KPMG and Rothstein Kass means superior service, market-leading insights and global reach. All under one roof.

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NEWS

If you have a news story for HFMWeek, please email: news@hfmweek.com

PEOPLE MOVES

HSBC prime services head leaves role

HSBC PRIME SERVICES global head of sales Chris Barrow has left his role. Barrow headed up the London- headquartered bank’s sales and mar- keting efforts until Friday, a source told HFMWeek. He remains listed on the FCA register in connection with HSBC but a bank spokesperson declined to comment on his next move. HSBC’s hire of Barrow in early 2010 was described at the time as one of the most high-profile addi- tions to its prime services team. Barrow joined HSBC from Normura, where he was internation- al head of sales for prime services. He had a previous stint at HSBC between 2004 and 2007 as head of sales and marketing for the global equity finance team. HSBC established its prime ser- vices team in 2009, gaining market share by bringing together its custo- dy business and global markets arm. j.leitner@hfmweek.com

CONTINUED FROM PAGE 1 various times in his career from Harbert, Deutsche Bank, Morgan Stanley

CONTINUED FROM PAGE 1

various times in his career from Harbert, Deutsche Bank, Morgan Stanley and Soros. Aithon has 2/20 fees, quarterly liquidity and a $1m investment minimum. Service providers include Deutsche Bank as prime broker and Akin Gump Strauss Hauer & Feld as legal counsel. Aithon and JP Morgan spokes- persons declined to comment. The news coincides with the release of ‘20 for 2015’, HFMWeek’s annual list of impend- ing launches (see page 16), which comes as confidence rises among prime brokers about the market. “We are in the most robust hedge fund start-up market since the crisis – the days of the $1bn launch are well and truly back,” said Omeed Malik, who heads Bank of America Merrill Lynch’s emerging manager program and US prime brokerage distribution. “It feels exactly the same here,”

said Carl Davey, who runs hedge fund sales in Asia for Citi Investor Services. “We are seeing a good number of new firms led by pedi- greed managers.” Four of the 20 managers on this year’s list are based in Asia, com- pared to just two last year, echo- ing improving confidence about the market for new hedge funds in the region. However, opinion was split among HFMWeek readers, with just over half describing the state of the global launch market as ‘middling’ and the remainder roughly split on the prospects for new hedge funds (see page five). Long/short equity is the best- represented strategy on the list. “It is the strategy of choice for investors,” added Malik, “and also where you are seeing the largest, most high-profile and best-pedi- greed start-up managers.” Turn to page 16 for the full list. e.margulies@hfmweek.com Additional reporting by Will Wainewright

SEARCH

KCERA mulls hedge fund investments

KERN COUNTY Employees’ Retirement Association (KCERA) is mulling up to two more hedge fund investments as it awaits the chance to allocate to soft-closed activist manager Cevian Capital. The $3.5bn pension scheme has signed off a $17m allocation to Stockholm-based Cevian Capital, an event-driven firm with $13.6bn AuM, but must wait for other inves- tors to redeem before it can invest as the fund has soft-closed. KCERA’s CIO Pete Tirp said that allocation was likely to happen in the next two quarters, making Cevian Capital the sixth hedge fund to be hired by KCERA this year. He said the pension is conduct- ing due diligence on two other hedge funds with a view to adding at least one more to reach its target exposure level of 10% before the end of 2014. KCERA has 13 hedge fund managers approved or invest- ed in including Cevian Capital. a.cardno@hfmweek.com

EDITOR’S VIEW BY PAUL McMILLAN p.mcmillan@hfmweek.com @mcmillan_paul “W e are in the most robust hedge

EDITOR’S

VIEW

BY PAUL McMILLAN

p.mcmillan@hfmweek.com @mcmillan_paul
p.mcmillan@hfmweek.com
@mcmillan_paul

“W e are in the most robust hedge fund start-up market since the crisis,” a senior

prime broker from Bank of America Merrill Lynch told us this week. It’s a bullish view of launch activ- ity echoed by many of his peers we spoke to as part of our ‘20 for 2015’ run-down of start-ups tipped to make the biggest impression next year

(p.16-19).

As you’d expect, the list is domi- nated by US funds but also includes a number of notable London launches and four Hong Kong-based start-ups, which experts say is an indication of a renewed buzz not seen in the region for years. Events at SAC Capital Advisors and the closure of Ziff Brothers’ hedge fund investing unit have added momentum to the current wave of high-profile new launches, trigger- ing managers with pedigree to go it alone. The growing number of soft clo- sures is also creating an attractive environment for start-ups that man- age to get off the ground. Although some investors are wary

of investing in unproven funds, oth- ers see the potential for uplift in the early years. Hedge Fund Research data we’ve compiled (p. 4) shows the huge outperformance of emerg- ing managers, 80.5% since 2007 compared to an industry benchmark of 33%. But there are also significant chal- lenges for funds looking to launch. This week’s reader’s survey suggests many managers are less sanguine about the new launch market (p. 5). Panellists at last week’s HFMWeek breakfast briefing in London said the introduction of the AFIMD had sty- mied launch activity in Europe and pointed to the length of time taken to get regulated in the UK, up to nine-months in some cases, as being a significant barrier. Although some clarity is still required around the AIFMD, a more stable regulatory outlook may well boost launches in the region next year. A bigger talking point may well be the size of the launch market which will be made up of Ucits rather than traditional Cayman-based funds. Definitely one to watch.

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I

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I

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ISSUE

watch. 25 SEP – 1 OCT 2014 I N T H I S ISSUE FUND MANAGER

FUND MANAGER INDEX

Alcentra

8

Arkkan Capital Management

7

Balyasny Asset Management

5

BozValen Asset Management

7

Caxton Associates

1, 5

DragonBack Capital

7

Duet Group

5, 6

Eagle Bay Capital

11

Gemcorp

5

Gondor Capital Management

10

Hermes BPK

6

Highbridge Capital Management

8

HT Capital Management

7

JP Morgan Asset Managemet

1

K2 Advisors

10

Kontiki Capital Management

7

Lampe, Conway & Co

10

Millennium Management

5

Moore Capital Management

5

Mount Kellett Capital

7

Omni Partners

11

Ouroboros Asset Management

10

Pinz Capital Management

5

Pleiad Investment Advisors

7

Quantum Global Investment Mgmt

6

Shoreline Capital

8

Soros Fund Management

1

TT International

11

Two Creeks Capital Management

7

Viking Global Investors

5

HFMWEEK.COM 3

MONITOR

MARKET

MONITOR M A R K E T INDEX PERFORMANCE 22 Aug - 22 Sep 2014 (%)
INDEX PERFORMANCE 22 Aug - 22 Sep 2014 (%) FTSE 100 NASDAQ S&P500 HFR INDEX
INDEX PERFORMANCE 22 Aug - 22 Sep 2014 (%)
FTSE 100
NASDAQ
S&P500
HFR INDEX
0.8
0.6
0.4
0.2
-0.0
-0.2
-0.4
-0.6
-0.8
-1.0
-1.2
25/08
27/08
29/08
02/09
04/09
08/09
10/09
12/09
16/09
18/09
22/09
BENCHMARKS
HIGHS&LOWS

YTD RETURNS

SOURCE: HSBC ALTERNATIVE INVESTMENT GROUP

HEDGE FUNDS

 

Pershing Square

Pharo Trading

HIGH

Intl Ltd

Fund

29.89%

21.34%

 

Rubicon Global

CC Asia Absolute Return Fund

LOW

Fund

-23.27%

-20.06%

PAGE NEW MANAGERS LEAD THE WAY SOURCE: HEDGE FUND RESEARCH Emerging hedge fund managers continue
PAGE
NEW MANAGERS LEAD THE WAY SOURCE: HEDGE FUND RESEARCH
Emerging hedge fund managers continue to lead industry performance, according to Hedge Fund Research
data. Managers with a track record of less than two years posted one-year returns of 11.27%, compared to 9.05%
for the HFRI Fund Weighted Composite Index. Funds owned by women and ethnic minorities also continued
to outperform with the HFRI Diversity Index posting returns of 11.09% over the same period. Since the start of
2007, emerging managers’ returns are 80.5%, or an annualised 8.19%, compared to the diversity index on 51%,
INSIGHT
annualised at 5.67% and the HFRI Fund Weighted Composite Index at 33%, annualised at 3.94%. The HFRI Fund
of Funds Composite Index struggled behind the others with total returns of 12.28%, annualised at 1.56%, with an
annual volatility of 5.86%, higher than the emerging manager index volatility of 5.16%. Meanwhile, launch activity
appears to be steady with 574 launches in the first half of the year compared to between 1,060 and 1,113 for the previous three full years. Liquidations
appear around the same as 2013 with 461 in the first half of 2014, compared to 904 in 2013, a figure that has steadily risen since the 743 liquidated in 2010.
1900
HFRI Fund Weighted Composite Index
HFRI Diversity Index
1800
HFRI Fund of Funds Composite Index
New Managers
1700
1600
1500
1400
1300
1200
1100
1000
900
800
2007
2008 2009
2010 2011
2012 2013
2014
1200
1197
1113
1108 1060
800
935
784
659
400
574
0
-400
-461
-563
-743
-775
-800
-873
-904
-1023
Launches
-1200
-1471
Liquidations
-1600
2007
2008
2009
2010
2011
2012
2013
2014
4
HFMWEEK.COM
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INDICES

INDICES SEPTEMBER 2014 HFRX HEDGE FUND INDEX (YTD 19 SEPTEMBER 2014) HEDGE FUNDS 2.02% MERGER ARBITRAGE

SEPTEMBER 2014

HFRX

HEDGE FUND INDEX

(YTD 19 SEPTEMBER 2014)

HEDGE FUNDS

2.02%

MERGER

ARBITRAGE

VALUEMERGER ARBITRAGE

RELATIVE

0.57%

MERGER ARBITRAGE VALUE RELATIVE 0.57% EMERGING

EMERGING

MERGER ARBITRAGE VALUE RELATIVE 0.57% EMERGING

MARKETS*

4.31%

 
 
 

EQUITY

EQUITY

EQUITY

EQUITY EQUITY EQUITY

LONG/SHORT

1.75%

SHORT BIAS*-5.14%

-5.14%

LONG/SHORT 1.75% SHORT BIAS* -5.14% MKT NTRL

MKT NTRL

2.38%

 
 
 

GLOBAL

MACRO

EVENT GLOBAL MACRO

DRIVEN

3.51%

GLOBAL MACRO EVENT DRIVEN 3.51% MULTI

MULTI

GLOBAL MACRO EVENT DRIVEN 3.51% MULTI

STRATEGY*

3.04%

1.31%EVENT DRIVEN 3.51% MULTI STRATEGY* 3.04% FUNDS OF HEDGE FUNDS* HFRI composite 2.67% 2.52% * As

FUNDS OF HEDGE FUNDS*

HFRI composite

2.67%

2.52%3.04% 1.31% FUNDS OF HEDGE FUNDS* HFRI composite 2.67% * As of 31 August LAUNCH Millennium-linked

* As of 31 August

LAUNCH

Millennium-linked Pinz Capital plans launch

Matthew Pinz to lead New York’s latest event-driven launch

PINZ CAPITAL Manage- ment, which ran money for Millennium Management, has split from Izzy Englander’s firm to launch its flagship event-driven

strategy independently, HFMWeek has learned. Matthew Pinz’s fund, named Pinz Capital International, will debut imminently and plans to raise an ini- tial $250m from investors globally before soft-closing, according to a source familiar with the plans. Pinz spent almost three years as a trader at Caxton Associates before joining Balyasny Asset Management as a portfolio manager in 2005, spending almost four years there. He had previously worked for Citigroup and Arnhold and S. Bleichroeder, and studied at Boston University’s School of Management.

$23.8bn MILLENNIUM MANAGEMENT ASSETS
$23.8bn
MILLENNIUM
MANAGEMENT
ASSETS

Pinz Capital Manage- ment, founded in March 2009, has been running money solely for Izzy Englander’s firm without other outside investors.

Justin Lee, who used to work with Pinz at Balyasny as an analyst, also joined the firm for the

launch. Pinz Capital charges fees of 1.5/20, has a $500,000 investment minimum and quarterly liquidity. Pinz Capital’s service providers include Jefferies as the prime broker and Mark LoPresti as the legal coun- sel. A Pinz spokesperson declined to comment. Millennium was founded by Englander in 1999 and manages around $23.8bn, which is allocated among its numerous trading teams. e.margulies@hfmweek.com

READER SURVEY
READER
SURVEY

HOW DO YOU VIEW THE CURRENT HEDGE FUND LAUNCH MARKET?

SURVEY HOW DO YOU VIEW THE CURRENT HEDGE FUND LAUNCH MARKET? Strong – the launch market

Strong – the launch market is healthier now than at any time since before 2008 25.9% since before 2008 25.9%

Middling – it remains hugely challenging to launch 51.9% 51.9%

Weak – most talented managers choose to join existing firms rather than go it alone 22.2% than go it alone 22.2%

Opinion is mixed among readers on the state of the hedge fund launch market, with more than half describing it as ‘middling’ in HFMWeek’s reader survey. More than a quarter said it was strong, convinced by an uptick in $1bn- plus launches this year, but almost the same amount described it as weak. Talented managers would be put off by the high costs involved, according to 22%.

LAUNCH

Ex-Goldman partner leads Gemcorp launch

A FORMER GOLDMAN SACHS partner has emerged as the CEO of Gemcorp, a new emerging markets- focused investment firm based in London. Atanas Bostandjiev specialised in emerging markets for the US bank before joining VTB Capital International, Russia’s largest bank, in 2011 as UK and international CEO. He left this summer. Gemcorp said in a statement on Monday it has raised $500m from European institutional investors to find and execute deals in emerg- ing markets. HFMWeek was first to report on the fund’s development earlier this year

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Bostandjiev is leading a 17-person team that includes several colleagues with whom he previously worked at Merrill Lynch. They include managing partner Selim Basak and partner Bojidar Savkov. Tue Sando will lead the firm’s legal and compliance after joining as partner from Duet Group. “We want to position ourselves as the access point for institutional investors when it comes to investing in emerging market sovereign and private sectors,” said Bostandjiev. “We see a gap where traditional financial institutions are unable to meet the demand from emerging mar- kets clients for flexible and reliable debt or equity financing solutions.” Gemcorp said investors have signed up to a lock-up period of five years. w.wainewright@hfmweek.com

VIKING CTO DEPARTS NICK LAGAROS HAS LEFT HIS ROLE as chief technology officer at Viking

VIKING CTO DEPARTS

NICK LAGAROS HAS LEFT HIS ROLE as chief technology officer at Viking Global Investors, sister title HFMTechnology has learned. Lagaros had been CTO since June 2010. Previously, Lagaros spent 16 years at Moore Capital Management in a similar position and has also worked in IT at Swiss Bank. Viking, with reported AUM of $24bn and headquartered in Connecticut, declined to comment on the move other than to confirm Lagaros’s exit. The firm recently restructured its chief investment officer position, with Tom Purcell, a co-CIO with Dan Sundheim, leaving his role for a six- month sabbatical in July.

c.matthews@hfmweek.com

20 FOR 2015 FEATURE 20 FOR 2015 hedge funds has been helped in particular by
20
FOR
2015
FEATURE 20 FOR 2015
hedge
funds
has
been
helped
in
particular
by
the
emergence
of
new
seeding
ventures.”
But
while
this
year’s
list
features
seeding
activity
from
names
ranging
from
Blackstone
to
Leucadia
National
Corp,
many
prime
brokers
believe
seed
deals
have
become
less
in
the
last
couple
of
years.
a to those “Equity important
“Founders
classes
are
becoming
much
more
prevalent
and
are
largely
the
preferred
option,”
says
Malik.
As
with
the
wider
industry,
long/short
equi-
ty
dominates
the
strategy
composition
of
the
list.
long/short
is
certainly
du
jour,”
20 FOR 2015
adds
Malik.
“It
is
the
strategy
of
choice
for
investors
and
also
where
you
are
seeing
the
largest,
most
high-profile
and
best-pedigreed
start-up
managers.”
The
majority
of
the
‘20
for
2015’
managers
have
come
other
hedge
funds
as
opposed
to
banks.
“Investors
have
more
confidence
in
the
‘been
there
done
that’
credentials
of
man-
agers
who
have
been
PMs
funds,
at other hedge
but
few
continue
to
make
it
from
other back-
grounds,”
says
Davey.
A
senior
prime
broker
in
London
the
failure
of
Goldman
Sachs
spinout
Edoma
Partners,
which
was
Europe’s
biggest
post-2008
hedge
fund
launch,
has
not
– from reach reputation share says will
helped
the
of
bank
spinouts.
“Managers
need
the
three
Ps:
pedigree,
performance
and
product,”
says
Malik.
“That
gets
you
in
the
door.
But
these
managers
from
brand-name
hedge
funds
fall
into
two
categories
those
who
were
investor
facing
and
who
weren’t.
The
cream
of
the
crop
money
managers
built
LP
relationships,
and
investors
were
able
to
build
trust
in
them
and
their
processes.
As confidence
in the
start-up market
builds,
HFMWeek
the hedge
the
interest examines among investors
“Investors
are
much
likelier
to
come
in
day
pipeline
generating
most
one
those
managers.
It
separates
the
$100m
and lists
20 freshest
fund launches
launch
from
the
$1bn
launch.”
That
assets
total,
as
ever,
remains
the
Holy
BY WILL WAINEWRIGHT
Grail
for
new
hedge
fund
launches.
The
next
he
post-crisis
era
has
proved
chal-
The
downsizing
of
SAC
Capital
Advisors,
since
12
months
determine
how
many
of
this
T
lenging
for
new
hedge
funds,
but
re-named
Point72
Asset
Management,
and
clo-
year’s
crop
it.
industry
participants
have
become
sure
of
Ziff
Brothers’
hedge
investing
unit
notably
bullish
about
the
start-up
have
both
had
big
impacts.
constituents
of
market.
“We
are
in
the
most
this
year’s
list
are
being
launched
by
managers
ABBERTON
CAPITAL
hedge
fund
start-up
market
since
the
who
previously
held
senior
positions
at
Ziff,
while
MANAGEMENT
crisis
the
days
of
$1bn
launch
are
well
and
three
worked
at
Point72.
A “A Four factor who closed fund is rise further
three
new
FOUNDER: Fredrik Juntti
truly
back,”
claims
Omeed
Malik,
who
heads
Bank
firms
recently
launched
by
SAC
alumni
in
the
UK
FOUNDED:
April 2014, London
of
America
Merrill
Lynch’s
emerging
manager
Ayora
Capital
Management,
Pagliaro
Capital
One
founding
behind
Montrica
programme
and
US
brokerage
distribution.
Management
and
HSE
Capital
Management
Investment
Management,
pre-crisis
success
“It
feels
the
same
here,”
says
Carl
have
also
generated
headlines,
but
did
not
make
story
up
TPG
Axon,
Juntti
is a
a by Davey, robust
on with AS of swallowed
who
runs
hedge
fund
sales
for
Citi
Investor
the
list.
returning
Abberton
Capital
Management,
Services
Asia.
“We
are
seeing
good
number
Observers
say
another
swelling
the
highly
tipped
London-based
start-up.
His
in looks earlier
of
new
firms
led
by
managers,
who
are
launch
numbers
for
new
firms
the
fact
that
many
co-founders
also
launch-
– the pedigreed prime
– the are in
coincidentally
building
infrastructures
and
brand-name
hedge
funds
are
to
new
mon-
ing
this
year
Svein
Hogset
with
– in ‘institutional-grade’ significant with exactly surpassing in
attracting
day-one
capital.”
ey,
improving
the
appeal
of
new
hedge
funds
start-
Incentive
Norway
– and
Andrew
Metcalfe
The
positivity
seems
to
be
borne
out
the
ed
by
alumni
of
those
firms.
number
of
higher-
with
Investment
by Management trio a say
to ventures third Lakefour later
numbers,
several
constituents
of
last
year’s
profile
managers
here
in
Asia
are
soft-closed
to
Switzerland
but
sources
Abberton
list
of
new
hedge
funds
raising
more
than
$1bn,
new
money,
which has
provided
opportunities
for
set
raise
the
most
backing.
Meditor
Capital
and
at
least
one
Herb
Wagner’s
Finepoint
new
launches
to
enter
the
market,”
adds
Davey.
Management
COO
Craig
Simkins
has
been
Capital
$2bn.
Sources
say
“per-
His
colleague
Carol
Teng,
works
for
Citi’s
brought
to
run
operations
for
Abberton,
an
fect
storm”
of
factors
have
combined
to
provoke
cap
intro
team,
adds
that
the
of
new
seeding
activist
investment
firm,
which
was
planning
a have
the
uptick
interest,
all
of
which
impacted
the mar-
to launch
next quarter with assets of around
HFMWeek’s
latest
round-up.
for
$200m.
new Asian
efforts such as HS Group has boosted
ket. “The fundraising environment
1 6
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016_019_HFM354_20for2015.indd
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FEATURE P16

HFMWEEK.COM 5

AUGUST 2014 INDICES
AUGUST 2014
INDICES

ABSOLUTE

RETURN

INDICES

SOURCE: Newedge Prime Brokerage Group

PEOPLE

MOVES

SOURCE: Newedge Prime Brokerage Group PEOPLE MOVES Credit Suisse has hired Aditi Velakacharla to head a

Credit Suisse has hired Aditi Velakacharla to head a team linking po- tential investors with Asian hedge funds, Bloomberg reports. Velakacharla is expected to start in Hong Kong in November.

Steve Cohen’s Point72 Asset Management has lost three employees – Tim Schneider, Pete Avel- lone and Shoney Katz – to Ken Griffin’s Citadel and money managers Chandler Bocklage and Ted Orenstein.

BlueBay Asset Manage- ment has appointed Wike Groenenberg as alternative strategy director. Groenenberg will manage the BlueBay Macro Fund and oversee investor relations.

Jefferies International has hired former Credit Suisse head of Nordic investment banking Fredrik Wranéus to run a planned office in Stockholm.

Pioneer Underwriting Limited has appointed Simon Holt as financial institutions underwriter for its new Financial Institutions (FI) offering. Holt was previ- ously at insurance company Travelers.

PEOPLE MOVES

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at insurance company Travelers . PEOPLE MOVES SPONSORED BY 6 HFMWEEK.COM VOL ATILIT Y TR ADING

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VOL ATILIT Y TR ADING INDEX AUG 2014 EST -0.67% YTD 2014 EST -2.25% PEOPLE
VOL ATILIT Y
TR ADING INDEX
AUG
2014 EST
-0.67%
YTD
2014 EST
-2.25%
PEOPLE MOVES
COMMODIT Y TR ADING INDEX SUB-INDICES EQUITY STRATEGIES AUG 14 2.05% AUG YTD 4.80% 2014
COMMODIT Y
TR ADING INDEX
SUB-INDICES
EQUITY STRATEGIES
AUG 14 2.05%
AUG
YTD 4.80%
2014 EST
0.82%
TRADING STRATEGIES
YTD
AUG 14 0.59%
2014 EST
4.01%
YTD 3.86%
MACRO TR ADING INDEX SUB-INDICES QUANTITATIVE AUG 14 3.89% AUG YTD 6.56% 2014 EST 1.16%
MACRO
TR ADING INDEX
SUB-INDICES
QUANTITATIVE
AUG 14 3.89%
AUG
YTD 6.56%
2014 EST
1.16%
DISCRETIONARY
YTD
AUG 14 -0.70%
2014 EST
0.23%
YTD -3.37%

PEOPLE MOVES

PEOPLE MOVES Goldman Sachs PB hires Topkins GOLDMAN SACHS PRIME SERVICES has hired Alex Topkins from

Goldman Sachs PB hires Topkins

GOLDMAN SACHS PRIME SERVICES has hired Alex Topkins from Barclays Prime Services as vice president in its capital introductions group, HFMWeek has learned. Topkins spent over seven years in the capital introductions unit at Barclays Prime Services, which emerged in the wake of the financial crisis when Barclays bought the busi- ness from Lehman Brothers. He initially joined Lehman Brothers in July 2007 and his most recent position was as vice president in capital introductions, a position he held since February following his pro- motion from associate vice president. According to a source, Topkins will start in early December. The firms declined to comment.

e.margulies@hfmweek.com

Credit Suisse hires new European consulting chief

Swiss bank swoops for ODD specialist Vincent Vandenbroucke

CREDIT SUISSE HAS appointed Vincent Vandenbroucke, ex-head of operational due diligence at Hermes BPK, to lead its European prime bro- kerage consulting effort. The appointment follows the departure of John Hindley, who end- ed a four-year stint at the Swiss bank earlier this year for a partner role at recruiting firm Heidrick & Struggles. Vandenbroucke started his new role based in Credit Suisse’s London office last Monday, and confirmed his appointment by telephone to HFMWeek last week. He spent five years at Hermes BPK and also counts Soros Fund

Management among his former firms, spending almost two years as controller in its private equity department. He has also worked for Axa Investment Managers, Pioneer Alternative Investments and Olympia Capital Management. The appointment is the latest to affect the consulting space after Deutsche Bank’s European head, Chris Farkas, recently left for Deloitte. Consultants offer hedge funds sup- port with operational, technological and other matters in tandem with the lending functions offered by prime brokerages. w.wainewright@hfmweek.com

THE WEEK
THE WEEK

The founder of InfraHedge, a hedge fund managed account platform, has been appointed by Barclays to run its wealth and investment management unit. Akshaya Bhargava (pictured) will start next month in replacement of Peter Horrell. Bhargava sold InfraHedge, which he launched in 2010, to State Street last year. He previously worked at Citibank for 22 years.

PEOPLE MOVES

Duet makes senior portfolio manager hire

DUET ASSET MANAGEMENT has appointed Joe Delvaux as a senior portfolio manager within the Africa liquid strategies team. Delvaux was formerly head of Africa and Middle East equities at Swiss fund manager Quantum Global Investment Management, where he managed its African Opportunity Fund. His appointment was confirmed by Ayo Salami, CIO of London-based Duet’s Africa liquid strategies team. Prior to Quantum, Delvaux worked at Kingsley Asset Management and Insparo Asset Management. The Duet Mena Horizon Fund was up by 22% in the year through 31 August, according to Zawya, a data provider. But Duet Global Fund Plus is down by -1.63% in 2014, according to HSBC data. Duet was founded by Henry Gabay and Alain Schibli in 2002 and man- aged $5.3bn as of 30 June 2014. r.langston@hfmweek.com

25 SEP

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OCT 2014

$4.5bn Calpers announces plan to redeem entire hedge fund allocation WEEK IN NUMBERS 4% Reports
$4.5bn Calpers announces plan to redeem entire hedge fund allocation WEEK IN NUMBERS
$4.5bn
Calpers announces plan to
redeem entire hedge fund
allocation
WEEK IN NUMBERS
4% Reports of new hedge fund activist involvement prompts quick rise in Adidas’s share price
4%
Reports of new hedge fund
activist involvement prompts
quick rise in Adidas’s share price
£58.5m Elliott Management makes almost $100m by selling stake in UK retailer Game Digital
£58.5m
Elliott Management makes
almost $100m by selling stake in
UK retailer Game Digital
55.3% More than two million Scots vote to remain part of the UK in last
55.3%
More than two million Scots vote
to remain part of the UK in last
week’s referendum
$1bn Goldman Sachs’ Oryza Asia hedge fund has a successful first year of fund-raising
$1bn
Goldman Sachs’ Oryza Asia
hedge fund has a successful first
year of fund-raising

LAUNCH

BosValen draws interest as Asia launch buzz builds

Ex-SAC manager behind one of four Asia start-ups in HFM list

FORMER SAC CAPITAL manager Ken Xu is launching a new hedge fund in Asia named BozValen Asset Management, one of several new firms drawing interest as buzz over Asian start-ups builds. Xu joined Steve Cohen’s firm, since renamed Point72 Asset Management, in 2011 and left earlier this year to build long/short equity firm BozValen. He is working with Simon Kemp, previous head of trading at Mount Kellett Capital, and Katherine Quinn, previously COO at HT Capital Management and DragonBack Capital, who have the same roles at BozValen. The firm is one of four new Asia- based hedge fund operators included in ‘20 for 2015’, HFMWeek’s annual round-up of launches generating the most interest among industry partici- pants. Last year’s list featured just two Asia-based firms. Carl Davey, who leads Asia hedge fund sales for Citi Investor Services, said the market for new hedge funds in Asia is stronger than at any point since the 2008 crisis. “We are seeing a good number of new firms led by pedigreed managers,

20 FOR 2015

20 FOR 2015 TURN TO PAGE 16 FOR THIS YEAR’S rundown, which is heavily influenced by

TURN TO PAGE 16 FOR THIS YEAR’S rundown, which is heavily influenced by the closure of Ziff Brothers’ hedge fund unit and the downsizing of SAC Capital/Point72 in the wake of the insider trading scandal. Four of the 20 new managers last worked at Ziff Brothers, most notably Ryan Pedlow, whose New York-based Two Creeks Capital Management is one of the year’s largest start-ups. A further three last worked at SAC Capital.

who are building ‘institutional-grade’ infrastructures and attracting signifi- cant day-one capital,” he said. Kontiki Capital Management, headed by ex-Ziff Brothers Asia head Gregard Heje, and Pleiad Investment Advisors, led by a pair of Soros Fund Management alumni, are also on the list. The fourth Asia-based launch to fea- ture is Arkkan Capital Management, headed by former Goldman Sachs special situations chief Jason Brown, who has reportedly won $200m from Blackstone. w.wainewright@hfmweek.com

THE WEEK
THE WEEK

Julian Robertson (pictured) has voiced concerns about the bond market, calling it a “bubble” that “will burst in a very bad way”. The Tiger Management founder’s fears were echoed by William Conway, a co-founder of Carlyle Group. The pair were speaking in New York at a conference organ- ised by Bloomberg. However, Conway remained optimistic on the US, saying: “The American economy is the best place to invest right now”.

CT more aggressive through releases, newspaper ads WHO WANTS TO BE AN and the media,”
CT
more
aggressive
through
releases,
newspaper
ads
WHO WANTS TO BE AN
and
the
media,”
he
says.
Massachusetts-registered
Lemelson
Manage-
ment
is
among
these
firms.
Chief
investment
officer
Em-
SEC TARGET?
manuel
Lemelson
says
he
the
Jobs
Act
as
an
opportu-
nity
to
speak
freely
“without
having
choose
every
word
carefully”.
“We
were
getting
good
results
and
thought
why
don’t
is Despite
the
recent
of the shift
general solicitation,
we
publicise
that?”
he
adds.
The
firm
to to now
sends
out
press
lawyers
say be CFTC’s take-up
Jobs to Act’s
allow advertising
flexibilities
releases
on
its
performance
and
had
secured
four
inter-
likely to
limited
views
with
the
press
that
BY MAIYA KEIDAN
TALKING
TO
THE
PRESS
Speaking
to
the
media
key
reason
tick
the
box
to
ast
autumn
the
SEC
carried
out
Congress’s
generally
solicit,
say
experts.
Prior
Act,
hedge
instruction
to
remove
decades-old
ban
on
fund
managers
could
talk
about
the
manager
and
their
general
solicitation
of
private
funds.
strategy
but
not
the
specifics
of
the
to
the
media.
However,
certain
voices
within
the
SEC
However,
this
was
seen
very
grey
area.
“It
depended
were
said
to
have
concerns
about
the
effect
of
on
what
law
firm
you
spoke
to
some
previously
funds
engaging
mainstream
adver-
did
not
feel
comfortable
hedge
funds
putting
any-
L hedge
tising
a freely, clients activity –
and
the
agency
proposed
onerous
accom-
thing
out
there,”
says
a saw with “In Steinbrugge, press a
Don
if in to managing Capital a firms Jobs
partner
panying
rules
which
made
the
new
regime
less
attractive.
at
third-party
marketer
Agecroft
Partners.
Lawyers
told
attendees
at
an
event
in
New
York
on
And
lawyers
say
that
is are on as TV week. while
many
I hedge the law the fund
fund
manag-
11
September
that
1,000
private
fund
managers
of
all
ers
are
not
interested
in
commercials
or
billboards
at
kinds
had
applied
to
market
under
the
Jobs
Act
by
the
Super
Bowl,
many
interested
speaking
about
checking
box
506(c)
of
securities
offering
Form
D.
But
performance
to
the
press.
the
past
reporter
called
the
hedge
fund
manager
numbers
much
lower,
ac-
you
with
incorrect
data
your
fund,
you
were
not
even
cording
to
experts,
with
some
a “They in reported to are
even
to
have
mis-
allowed
to
correct
them
because
of
anti-solicitation
takenly
ticked
the
box.
rules,”
says
one
US
lawyer.
Under
the
new
rules,
managers
can
talk
to
the
media
Max
Hilton,
director at PR firm Peregrine’s New York
more
engage
in
discussions
on
social
media
and
at
events,
upgrade
their
websites
to
provide
more
informa-
tion
and
advertise
more
generally.
Several
New
York
hedge
fund
lawyers
have
noted
that
IT DEPENDED ON WHAT LAW FIRM YOU SPOKE
while
had
approached
them
consider
venturing
into
general
solicitation
territory,
few
have
proceeded.
“It
DID NOT
hasn’t
taken
off,”
says
Kevin
Scanlan,
partner
at
Dechert.
TO – SOME LAW FIRMS PREVIOUSLY
“I
don’t
have
any
clients
that
have
checked
the
506(c)
box,
FEEL COMFORTABLE WITH HEDGE
FUNDS PUTTING
although
multiple
clients
have
talked
about
it.”
One
Boston-based
lawyer
says
he’s
seen
limited
take-up
from
couple
of
smaller
managers.
are
two
smaller
hedge
fund
managers
really
trying
to
raise
capital
and
be
2 0
HFMWEEK.COM
ANYTHING OUT THERE
DON STEINBRUGGE,
AGECROFT PARTNERS
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SEP
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If you would like to comment on any investor-related news story or development, contact Alex Cardno, HFMWeek investment editor, at a.cardno@hfmweek.com

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Cheshire West and Chester and the London Borough of Lambeth pen- sion funds are among the UK schemes attending the 12th Annual Local Govern- ment Pension Investment Forum on 22 October.

California Public Employ- ees’ Retirement System (Calpers) has appointed Ted Eliopoulos as CIO. He assumes the role perma- nently having served as interim CIO since June 2013.

Cliffwater has been rehired as hedge fund consultant for the $80.6bn New Jersey Division of Investment. The decision to reappoint Cliffwater on a three-year contract with two additional one-year extensions follows an RFP issued in May 2014.

London-based FoHF Headstart Advisers is as- sessing further Asia-focused investments after adding a third manager concentrated on the region in July.

San Francisco Employees’ Retirement System has delayed a vote on whether to invest in hedge funds for at least 90 days, following an investment committee meet- ing at which CIO Bill Coaker presented a plan to invest up to 15% of the $19bn fund’s assets in hedge funds.

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TOTAL AUM $2.76bn CONSULTANT Mercer ACTIVITY Started searching for multi-asset credit and absolute return fixed income managers

PERMAL GROUP

TOTAL AUM $22.3bn ACTIVITY Eyeing opportunities in event-driven and macro strategies

MERRANT FONDER

TOTAL AUM $100m ACTIVITY Seeking two manag- ers in relative value fixed income

ILLINOIS TEACHERS’

RETIREMENT SYSTEM

TOTAL AUM $45.3bn CONSULTANT Albourne ACTIVITY Seeking two to three non-directional hedge funds for allocations of between $150m and $200m each

SEARCH

Highbridge closes in on Essex Council illiquid debt ticket

Alcentra also running for £4.3bn UK scheme’s mandates

CREDIT SPECIALISTS Highbridge Capital Management and Alcentra are in the running for an illiquid debt mandate from Essex County Council. The £4.3bn ($7bn) UK local authority scheme has named the two hedge funds alongside private equity firm Partners Group as finalists for the £80m to £100m ($130.2m to $162.75m) ticket. US-based Highbridge manages approximately $29bn across a num- ber of equity and credit hedge, long- only and longer lock-up funds. In the last few months it has significantly increased its UK presence, adding 15 employees to its London office since January. BNY Mellon-owned Alcentra manages $23bn across 48 investment

products while Zug-based Partners Group has €30bn across private equi- ty, private debt, private real estate and private infrastructure. The pension fund started search- ing for a manager to run a long-only, multi-illiquid debt portfolio in May when it released a request for pro- posal (RFP). Essex County Council received interest from 32 managers, of which 15 completed and returned applica- tions. The search for a manager to run a pooled illiquid debt fund investing in direct corporate lending, real estate lending and distressed debt was con- ducted by the pension scheme’s con- sultant, Hymans Robertson. j.leitner@hfmweek.com

WILTSHIRE BOND SEARCH ESSEX COUNTY COUNCIL’S search comes hot on the heels of Wiltshire County

WILTSHIRE BOND SEARCH

ESSEX COUNTY COUNCIL’S search comes hot on the heels of Wiltshire County Council, which has begun its own search for multi-asset credit and absolute return fixed income managers. The £1.7bn ($2.76bn) pension fund has instructed investment consultant Mercer to start looking for managers in those areas as part of its bond allocation. Wiltshire currently has approxi- mately £180m ($292.2m) dedicated to fixed income. The council has not yet decided how much might be allocated to the new mandate or whether the allocation will come from a reduction to traditional bond investments or from an expansion of that asset class. The pension fund decided last year to redeem from its only FoHF, Jubilee Advisers (previously named Fauchier Partners) after placing them on watch in 2012. A timeline and further details of the search will be discussed at Wiltshire’s next pension fund commit- tee meeting on 11 December, but the mandate could be awarded next year.

ALLOCATION

Michigan Uni tops up Shoreline allocation

THE UNIVERSITY OF Michigan endowment invested $30m in dis- tressed and special situations manager Shoreline Capital earlier this year. The $9.5bn Ann Arbour, Michigan- based endowment invested in the Shoreline China Value III in April, according to an investment update. Based in Guangzhou, China, the firm makes distressed and special situ- ations investments in mainland China. The University of Michigan endow- ment has had previous investments with Shoreline, investing $20m in Shoreline China Value II in October 2012, when it sought to diversify its exposure to distressed investments. Shoreline started trading in 2004 and was founded by Xiaolin Zhang and Benjamin Fanger. j.leitner@hfmweek.com

PENSION FUND

TCERA “struggling” with hedge fund decision

TULARECOUNTYEMPLOYEES’ Retirement Association (TCERA) says it is “struggling” to reach a deci- sion on increasing hedge fund expo- sure as it mulls different approaches to allocating to the space. The $1.07bn California pension fund has a 5% target allocation to the sector but current hedge fund exposure stands at 2.5%. It has been mulling further hedge fund investments for the last 12 months and was due to make a deci- sion on increasing exposure at an investment committee meeting on 15 September. It is considering FoHF Fintan Partners for a possible investment due to its fixed income approach as it seeks ways to reduce equity risk exposure, but is also considering

a risk parity approach to its entire portfolio. These decisions were debated in TCERA’s last two investment committee meetings, but retire- ment plan administrator David Kehler said no conclusion had been reached. “Our board has been struggling with the issue of our allocation to hedge funds for quite some time now,” he said. “The board is looking at ways to reduce the portfolio’s equity risk level so a manager like Fintan may be a good fit to meet that objective. The board is also considering a risk parity approach and has been debat- ing this along with the hedge fund allocation. I don’t think the questions we have regarding our exposure to hedge funds and/or a risk parity approach will be resolved any time soon.” a.cardno@hfmweek.com

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OCT 2014

REGUL ATION INDEX

REGUL ATION INDEX COMPLIANCE INVESTOR If you would like to comment on any compliance-related news story

COMPLIANCE INVESTOR

If you would like to comment on any compliance-related news story or development, contact Maiya Keidan, HFMCompliance editor, at m.keidan@hfmweek.com

30 SEP 14

REGULATION – UK Written evidence must be submitted to House of Lords on financial regulatory framework inquiry

1 OCT 14 NFA Assessment fees for futures and options contracts to be halved each
1 OCT 14
NFA
Assessment fees for
futures and options
contracts to be halved
each side

9 OCT 14

UK FATCA HMRC to hold town hall meeting on consultation paper

10 OCT 14 DEALING COMMISSIONS – UK Managers must respond to consultation paper
10 OCT 14
DEALING
COMMISSIONS – UK
Managers must
respond to
consultation paper

15 OCT 14

MAD II Consultation closes on draft regulation and implementing technical standards

MIFID II

FCA: Mifid transparency should not hit liquidity

THE MIFID II GOAL OF increased transparency should not come at the cost of reduced liquidity and must be balanced with the needs of market participants in areas such as data col- lection, according to the FCA. Speaking at a conference on the upcoming European directive in London on Monday, the UK regu- lator’s director of markets David Lawton set out the diverse range of changes Mifid II would introduce from January 2017. Mifid II is set to bring market transparency to bond and deriva- tives trading, which will need to take place on exchanges or similar venues. However, Lawton said regulators needed to take care when setting these new rules. “Mifid II weighs in favour of more transparent trading. But important questions remain about how this is done, and in particular how to increase transparency without reduc- ing liquidity,” he said. Under Mifid II best execution pro- posals a number of new standardised data requirements will be introduced but Lawton said the FCA was aware of industry concerns about the amount of data being collected. He said: “We remain conscious that more disclosure and more trans- parency is not a panacea – we need to get the balance right and provide market participants with data that they both want and need.” Lawton stressed the FCA backed Esma’s proposals to ban the use of dealing commissions to pay for bespoke research, although he acknowledged this was a “hot-button topic” for some. He also highlighted new plans to govern high frequency trading. “We have to develop a balanced regime that doesn’t throw our mar- kets back into the technological dark- ages, but ensures they are fair and safe for all users in the future,” he added. p.mcmillan@hfmweek.com

25

SEP

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OCT 2014

AIFMD

Non-EEA AIFMs marketing is ‘lower than expected’

FOI request reveals 491 notification forms filed by 26 Aug

NEW FIGURES OBTAINED through a Freedom of Information (FOI) Act request on the number of AIFMs outside of Europe that have opted to market into the UK through private placement are sur- prisingly low, say experts. The FCA revealed to sister title HFMCompliance that 491 notifica- tion forms had been filed as of 26 August, with 374 using the Article 42 form for full AIFMs and 117 submitting the third-country form. Gary Kaminsky, managing director at ConceptOne, said that with around 3,000 hedge fund investment advisers registered with the SEC alone, “the number seems low”. “I heard that it was less than the

FCA was expecting,” said one law- yer who did not wish to be named. The UK regulator declined to comment. “The numbers are much lower than I would have expected – an awful lot are scared to draw them- selves into the AIFMD,” said Neil Robson, partner at Katten Munchin Rosenman. “Managers can’t engineer reverse solicitation, although they think they can.” “My sense is the number is lower than expected,” said Simon Thomas, partner at Macfarlanes, although he added the pool of funds actively marketing in Europe was probably smaller than supposed. “What the directive has done is stopped US managers coming

R ATINGS

Reinsurance ‘A’ is unlikely, warns Fitch

RATINGS AGENCY FITCH HAS warned new hedge funds entering the reinsurance space they are unlikely to receive an ‘A’ insurer financial strength rating. “A big fall in asset values could deplete a hedge fund reinsurers’ capital, putting strain on the com- pany if it coincided with unusually high claims payouts,” said Fitch. It added hedge fund reinsurers may be able to receive an A rating in the long term.

to London on the off-chance,” he said. Devarshi Saksena, partner at Simmons & Simmons, said he expected more managers to reg- ister once they realised the limits of reverse enquiry in the UK and in other EEA jurisdictions and as the Article 42 compliance process becomes tried and tested. m.keidan@hfmweek.com

THE WEEK A senior SEC official, Andrew Bowden ( pic- tured ), has warned that
THE WEEK
THE WEEK

A senior SEC official, Andrew Bowden (pic- tured), has warned that some hedge funds do not give clear accounts of their performance or how they calculate it when communicating with investors. “We’ve seen people passing off past specific recom- mendations that they never made,” the US watchdog’s Compliance and Examinations Director was quoted as saying by Bloom- berg. The agency is examining data from hundreds of hedge funds forced to disclose data by the Dodd-Frank Act.

PHOTO: SEC/FLICKR

IRELAND

Irish regulator warns over filing failings

REGULATORY FILINGS AND the processes around them are inadequate at a number of firms, announced the Central Bank of Ireland after conduct- ing a thematic review of investment firms and fund service providers. The bank noted in a letter to indus- try earlier this month that relevant staff at some firms could not demon- strate sufficient knowledge of regula- tory obligations or the methodologies used, while several companies lacked oversight in the production process. “Firms should review existing pro- cedures to ensure that due care and attention is given to the production, oversight and reporting of all regu- latory returns,” said Patricia Dunne, deputy head of investment funds and fund supervision at the bank. m.keidan@hfmweek.com

HFMWEEK.COM 9

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LAUNCH ACTIVITY LAUNCHES & CLOSURES If you would like to comment on any start-up-related news story

LAUNCHES&

CLOSURES

If you would like to comment on any start-up-related news story or development, contact Elana Margulies, HFMWeek chief reporter, at e.margulies@hfmweek.com

LAUNCH ACTIVITY CONTINUES ON P13 LAUNCH
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PINZ CAPITAL

MANAGEMENT

NAME Pinz Capital International STRATEGY Event-driven LAUNCH DATE Q3, 2014

BRIDGEWATER

ASSOCIATES

NAME Optimal Portfolio Strategy STRATEGY Global macro LAUNCH DATE Sep 2014

MARATHON ASSET

MANAGEMENT

NAME Marathon Structured Product Strategies Fund STRATEGY Debt LAUNCH DATE Aug 2014

LAUNCH

SCOPERTA CAPITAL

STRATEGY Long/short TMT LAUNCH DATE Jan 2015

Advisory and Salomon Smith Barney. Veltri’s background includes working with senior manage- ment to develop and market both private and public equity instru- ments where he helped raise hundreds of millions of dollars for his clients through the launch of IPOs, private placements, and direct participation programs. Lazarowitz most recently worked for Neuberger Berman. e.margulies@hfmweek.com

Ouroboros AM prepares flagship vehicle

Denver-based firm targets up to $100m for offering

OUROBOROS ASSET Manage- ment, a Denver-based firm formed earlier this year, will launch its maiden hedge fund in either January or February, HFMWeek has learned. The offering, named the Ouroboros Fund, will focus on specific market-neutral approach- es that involve the use of propri- etary algorithmic trading models, reverse momentum-based deriva- tives trading strategies, long/ short equity strategies, as well as identifying arbitrage opportuni- ties across several markets. Ouroboros is targeting just under $100m for the fund. “With the inception of Ouroboros Fund, we envision a unique platform that will allow us to generate significant risk-adjust- ed returns, while in turn, gener- ating the capital, in-house, to explore and develop more long- term projects through our private equity operations,” said managing partner David Lazarowitz. The firm’s other managing partners are Joshua Lockwood and J Saint Veltri.

Lockwood previously founded Lockwood Equity Group, a pri- vate equity and investment advi- sory firm. He has held positions at Bank of America Merrill Lynch, Charles Schwab Investment

Franklin Templeton soft- launches Ucits fund

FRANKLIN TEMPLETON HAS

soft-launched its first Ucits-registered alternative strategy fund with K2 Advisors, a FoHF manager it pur- chased in 2012. The Franklin K2 Alternative Strategies Fund will sit within the $922.2bn mutual fund giant’s Luxembourg-domiciled Franklin Templeton Investment Funds (FTIF) SICAV range. In a statement, Franklin Templeton said the fund was soft launched on 15 September as a multi-manager, multi- strategy liquid alternative portfolio. Its objective is to seek capital appreciation with lower volatility than broad equity markets by invest- ing across multiple non-traditional or alternative strategies including long- short equity, relative value, event driven and global macro. The fund will be accessible to investors from mid-October, with a date to be confirmed nearer the time. Franklin Templeton purchased $10bn FoHF K2 Advisors in November 2012 in one of several deals pairing a FoHF manager with

a larger non-FoHF firm. A similar

acquisition saw Liongate Capital,

a London-based FoHF, bought last

year by US giant Principal Global Investors.

EXTERNAL OPENS

EXTERNAL OPENS GONDOR CAPITAL MANAGEMENT AND Lampe, Conway & Co have both opened funds to outside

GONDOR CAPITAL MANAGEMENT AND Lampe, Conway & Co have both opened funds to outside inves- tors in separate moves reported by HFMWeekOnline last week. New York-based Gondor Capital Management has launched onshore and offshore versions of its maiden strategy externally. Gondor Partners, LP and Gondor Partners, Ltd, started trading in May and July last year and employ an equity long/short strategy with an options overlay and trade US listed equities. It is targeting primarily high-net- worth individuals, family offices and state pensions that invest in both emerging and minority-owned fund managers to reach $250m in assets. “The fund is a perfect comple- ment to investors’ portfolios as

our performance is best during a sideways market,” said Vincent Au, founder. Prior to setting up Gondor Capital in 2012, he founded Avalon Partners, an investment firm he ran from 1996 until 2011. Lampe, Conway & Co, a New York-based distressed credit hedge fund manager, had opened its third offering to outside investors after launching in February. According to a source, the offering, the LC Capital Targeted Opportunities Fund, is a special situ- ations and distressed strategy that will target primarily endowments, foundations and family offices to reach a capacity of less than $1bn. The LC Targeted Opportunities Fund is managed by Steve Lampe and Richard Conway, who co-found- ed the firm in 1999.

a.cardno@hfmweek.com

Lampe and Richard Conway, who co-found- ed the firm in 1999. a.cardno@hfmweek.com 10 HFMWEEK.COM 25 SEP
Lampe and Richard Conway, who co-found- ed the firm in 1999. a.cardno@hfmweek.com 10 HFMWEEK.COM 25 SEP
Lampe and Richard Conway, who co-found- ed the firm in 1999. a.cardno@hfmweek.com 10 HFMWEEK.COM 25 SEP
Lampe and Richard Conway, who co-found- ed the firm in 1999. a.cardno@hfmweek.com 10 HFMWEEK.COM 25 SEP
Lampe and Richard Conway, who co-found- ed the firm in 1999. a.cardno@hfmweek.com 10 HFMWEEK.COM 25 SEP
Lampe and Richard Conway, who co-found- ed the firm in 1999. a.cardno@hfmweek.com 10 HFMWEEK.COM 25 SEP

10

HFMWEEK.COM

25 SEP – 1 OCT 2014
25 SEP
1
OCT 2014

WHITEBOX ADVISORS

NAME Whitebox Special Opportunities Fund E STRATEGY Debt LAUNCH DATE Oct 2014

C-VIEW

NAME C-View Stelrox Systematic Currency Strategy STRATEGY Currency LAUNCH DATE Sep 2014

CITY FINANCIAL

INVESTMENT CO.

STRATEGY Long/short Chinese stocks and pan-Asian corporate bonds LAUNCH DATE TBD

CT INVEST

STRATEGY European equities LAUNCH DATE Q4 2014

LAUNCH

Omni Partners launches long/short hedge fund

London firm starts fourth strategy as internal offering opens up

OMNI PARTNERS, A London- based firm managing $830m, is launching its long/short equity prod- uct to outside investors after incubat- ing the strategy since January this year. The 10-year-old firm announced the launch of the Omni European ELS fund last week. The strategy, co-managed by Howard Spooner and Hugh Selby- Smith, will focus on European oppor- tunities. Spooner joined last year from Barclays, where he was head of equi- ty trading, while Selby-Smith was recruited from TT International.

The strategy will be the fourth Omni has opened to external inves- tors, complementing its event-driven, macro and secured lending funds. “Omni provides experienced pro- fessionals like Howard and Hugh with the institutional infrastructure and support that enables them to focus on generating attractive risk adjusted returns,” said Peter Coates, who joined as CEO this year from Lighthouse Partners, where he was head of Europe. “I was provided a blank sheet of paper to design my ideal product, from both a process and risk perspec-

STRATEGY SPOTLIGHT OMNI EUROPEAN ELS’S PORTFOLIO has three stages – base, trading and opportunistic. Stocks

STRATEGY SPOTLIGHT

OMNI EUROPEAN ELS’S PORTFOLIO has three stages – base, trading and opportunistic. Stocks initially selected for the base portfolio, which aims to be market and sector neutral, are whittled down on a discretionary basis. This results in between 40 and 50 stocks covering between nine and 11 sectors, which are then sized up or down in the trading book. The opportunistic portfolio is precluded from owning more than three single-stock, sector-specific or thematic views at any given time. SOURCE: Omni

tive,” added Spooner in a statement. Read HFMWeek later this month for an exclusive interview with Peter Coates about Omni’s plans for the future. e.margulies@hfmweek.com w.wainewright@hfmweek.com

THE WEEK
THE WEEK

Regulatory costs and burdens are a tough hurdle to overcome for new UK launches but panellists at last week’s HFMWeek Breakfast Briefing expect a pick-up in activity in the near future. Goldman Sachs’ head of European cap intro Nick Guano, Maples Financial Services director European business development Stephen Lewis, OESA founder Karen Wormald and LTW Capital founder Nabil Kobeissi debated the big themes affecting new launches at the Four Seasons Hotel in London (pictured).

25

SEP

1

OCT 2014

LAUNCH

Eagle Bay Capital lines up new hedge fund

EAGLE BAY CAPITAL, a New York- based managed accounts specialist which closed its last hedge fund last year due to high expenses, will launch a successor fund in November. HFMWeekOnline revealed last week the offering will be called Ibis Global Partners and focus on long/ short global macro opportunities, in common with the last fund. That offering, Ibis Fund I, oper- ated for six months last year but shut down due to a high expense ratio. The fund will roll out with $10m. Eagle Bay founder JC Parets, who launched the firm in 2012, is senior edi- tor of financial website AllStarCharts. com and was previously vice-president of investments at Westrock Advisors for six years until 2010. Service providers include Kleinberg Kaplan Wolff Cohen, Apex Fund Services, TD Ameritrade and Mike Coglianese. e.margulies@hfmweek.com

CONTINUES ON P13 EAGLE BAY CAPITAL
CONTINUES ON P13
EAGLE BAY CAPITAL

NAME Ibis Global Partners STRATEGY Long/short global macro LAUNCH DATE Nov 2014

 

L AUNCHES

& CLOSURES

IN

BRIEF

 
 
 

City Financial is planning to launch a second hedge fund in Asia and is cur- rently on a hiring drive for its Hong Kong-based office, Reuters reported last week.

New York-based start-up Pagoda Asset Man- agement, founded by ex-Highbridge Capital manager Adam Bernstein, has hired a seven-person team and looks set to start trading on 1 October.

The scions of a number of wealthy families, including the sons of prominent Wall Street figures Howard Marks and Ken Moelis, have either recently launched hedge funds or plan to do so soon, the WSJ reported last week.

Former Catlin Group and Goldman Sachs manager Dhruv Narain is reportedly raising money for a new hedge fund management firm and plans to launch around 1 January.

Chicago-based Peak6 Investments is selling its ownership stake in its $2.3bn hedge fund unit, which is spinning out as a new re-named firm named Achievement Asset Management.

LAUNCHES IN BRIEF

SPONSORED BY

unit, which is spinning out as a new re-named firm named Achievement Asset Management . LAUNCHES

HFMWEEK.COM 11

SEARCH ACTIVITY

S E A RC H ACTIVITY

A WEEKLY COMPENDIUM OF RECENT HEDGE FUND SEARCHES AND INVESTMENT MANDATES

S E A RC H ACTIVITY A WEEKLY COMPENDIUM OF RECENT HEDGE FUND SEARCHES AND INVESTMENT

To comment, contact Alex Cardno at a.cardno@hfmweek.com

Continued from page 8, compiled by HFMWeek

Continued from page 8, compiled by HFMWeek   AUG 2014   CITY OF MOBILE POLICE &
 

AUG 2014

  AUG 2014
  CITY OF MOBILE POLICE & FIRE RETIREMENT PLAN
 

CITY OF MOBILE POLICE & FIRE RETIREMENT PLAN

 

TEXAS ERS

TOTAL AUM $21bn

TOTAL AUM Not disclosed

CONSULTANT Albourne

CONSULTANT Gray & Company

ACTIVITY Seeking two directional growth hedge fund managers to invest up to $250m each

ACTIVITY Considering up to four man- agers for possible investment

 
 
 
  EL PASO COUNTY RETIREMENT PLAN
 

EL PASO COUNTY RETIREMENT PLAN

 

CARNEGIE MELLON

UNIVERSITY

TOTAL AUM $319m

TOTAL AUM $1.07bn

CONSULTANT Watershed Investment Consultants

ACTIVITY Looking to hire two or three HFs running relative value and market neutral strategies in the next six months

ACTIVITY Heard recommendations on potential FoHF managers at August meeting

  ACTIVITY Seeking long/short, event- driven and relative value managers
 

ACTIVITY Seeking long/short, event- driven and relative value managers

 

AURORA INVESTMENT

MANAGEMENT

 

TOTAL AUM $9.1bn

TOTAL AUM $9.1bn

ACTIVITY Mulling increased exposure to “portfolio hedge” strategies. Also researching bank merger space

 

ILLINOIS STATE UNIVERSITIES RETIREMENT SYSTEM

TOTAL AUM $16.4bn

 

CONSULTANT NEPC

 

JUL 2014

ACTIVITY Planning to issue an RFP in its first search for hedge funds

Planning to issue an RFP in its first search for hedge funds   SAN JOSE FEDERATED
 

SAN JOSE FEDERATED RETIREMENT SYSTEM

  SAN JOSE FEDERATED RETIREMENT SYSTEM

TOTAL AUM $2.5bn

CONSULTANT Albourne

 

PENNSYLVANIA TURNPIKE COMMISSION

ACTIVITY Issuing mandate to hedge fund manager worth 5% of overall investment portfolio

TOTAL AUM $6.8bn

CONSULTANT Investment Perfor- mance Services

ACTIVITY Searching for a FoHF manager for a mandate of around

ACTIVITY Searching for a FoHF manager for a mandate of around

 

KAZAKHSTAN NATIONAL INVESTMENT CORPORATION

$13m

 

TOTAL AUM $110bn (approx)

TOTAL AUM $110bn (approx)

ACTIVITY Issued RFP for hedge fund consultant to take on $300m mandate

 

DEUTSCHE ASSET & WEALTH MANAGEMENT (DEAWM)

TOTAL AUM $137.5bn

ACTIVITY Could add emerging market managers to its panel

ACTIVITY Could add emerging market managers to its panel

 

MORGAN STANLEY WEALTH MANAGEMENT

 

TOTAL AUM $1.9trn

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1 2
HFMWEEK.COM
25 SEP
1
OCT 2014

LAUNCH ACTIVITY

L A U N C H ACTIVITY

A WEEKLY COMPENDIUM OF HEDGE FUND LAUNCH ACTIVITY

L A U N C H ACTIVITY A WEEKLY COMPENDIUM OF HEDGE FUND LAUNCH ACTIVITY

To comment, contact Elana Margulies at e.margulies@hfmweek.com

 

Continued from pages 10&11, compiled by HFMWeek

  Continued from pages 10&11, compiled by HFMWeek   REPORTED SEPTEMBER 2014   361 CAPITAL
 

REPORTED SEPTEMBER 2014

 
361 CAPITAL

361 CAPITAL

361 CAPITAL
 

ALGEBRIS INVESTMENTS

 

NAME 361 Global Long/Short Equity Fund

STRATEGY Buy non-performing loans in Italy

STRATEGY Long/short equity mutual

LAUNCH DATE TBD

LAUNCH DATE Sep 2014

 
 
 
OUROBOROS ASSET

OUROBOROS ASSET

 

THEMIS MANAGEMENT

NAME Themis Legal Capital

 

MANAGEMENT

STRATEGY Specialty finance

NAME Ouroboros Funds

LAUNCH DATE Q4, 2014

STRATEGY Market neutral

 

LAUNCH DATE Q1, 2015

LAUNCH DATE Q1, 2015
   

LESTE

STRATEGY Risk arbitrage, credit, distressed

STRATEGY Risk arbitrage, credit, distressed

 

PAGODA ASSET

MANAGEMENT

LAUNCH DATE TBD

NAME TMT and consumer-focused STRATEGY Long/short equity

NAME TMT and consumer-focused STRATEGY Long/short equity

LAUNCH DATE Oct 2014

 

OURAY MANAGEMENT

 

STRATEGY European equities

SAGAT CAPITAL

SAGAT CAPITAL

LAUNCH DATE Nov 2014

 
 

NAME Systematic Diversified Programme

  NAME Systematic Diversified Programme
 

SHADOW TREE CAPITAL

STRATEGY CTA

NAME Shadow Tree Income Fund B

LAUNCH DATE TBD

STRATEGY Direct lending

 

LAUNCH DATE Oct 2014

 
 
 

VIRTUS INVESTMENT

  VIRTUS INVESTMENT

PARTNERS

 

CAHERA CAPITAL

NAME Virtus Strategic Income Fund

STRATEGY Equities

STRATEGY Alternative income

LAUNCH DATE Q4, 2014

LAUNCH DATE Sep 2014

 
 
 
OLD HILL PARTNERS

OLD HILL PARTNERS

 

BROOKFIELD ASSET

MANAGEMENT

 

STRATEGY Specialty finance

NAME Brookfield Event-Driven Op- portunities Fund

LAUNCH DATE Q3, 2014

 

STRATEGY Event-driven

BEACH HORIZON

BEACH HORIZON

LAUNCH DATE Sep 2014

 
 

STRATEGY Ucits-compliant directional managed futures

  STRATEGY Ucits-compliant directional managed futures
 

ADVANTAGE CAPITAL

LAUNCH DATE Oct 2014

MANAGEMENT

 

STRATEGY Special situations fund

SEVEN SAGES CAPITAL

SEVEN SAGES CAPITAL

LAUNCH DATE Oct 2014

 
 

STRATEGY Global macro

LAUNCH DATE TBD

25

SEP

1

OCT 2014

EATON VANCE NAME Eaton Vance Richard Bernstein Market Opportunities Fund STRATEGY Macro LAUNCH DATE Q3,

EATON VANCE

NAME Eaton Vance Richard Bernstein Market Opportunities Fund

STRATEGY Macro

LAUNCH DATE Q3, 2014

Opportunities Fund STRATEGY Macro LAUNCH DATE Q3, 2014 GREY INVESTMENT MANAGEMENT NAME Grey Value Opportunity Fund

GREY INVESTMENT

MANAGEMENT

NAME Grey Value Opportunity Fund

STRATEGY Value-oriented equity

LAUNCH DATE Oct 2014

Fund STRATEGY Value-oriented equity LAUNCH DATE Oct 2014 ZAFIRO CAPITAL NAME Zafiro Capital Commodities Trading Fund

ZAFIRO CAPITAL

NAME Zafiro Capital Commodities Trading Fund

STRATEGY Fundamental discretionary commodity

LAUNCH DATE Q4, 2014

Fundamental discretionary commodity LAUNCH DATE Q4, 2014 SILVER RIDGE ASSET MANAGEMENT STRATEGY Global macro LAUNCH

SILVER RIDGE ASSET MANAGEMENT

STRATEGY Global macro

LAUNCH DATE Q1, 2015

MANAGEMENT STRATEGY Global macro LAUNCH DATE Q1, 2015 HARTFORD FUNDS NAME Long/Short Global Equity Fund STRATEGY

HARTFORD FUNDS

NAME Long/Short Global Equity Fund

STRATEGY Liquid alternative long/ short fund

LAUNCH DATE Q3, 2014

Liquid alternative long/ short fund LAUNCH DATE Q3, 2014 HORSEMAN CAPITAL MANAGEMENT NAME Horseman European Select

HORSEMAN CAPITAL

MANAGEMENT

NAME Horseman European Select UCITS Fund

STRATEGY Ucits-compliant European long/short equity

LAUNCH DATE Sep 2014

European long/short equity LAUNCH DATE Sep 2014 CLOVERDALE CAPITAL STRATEGY Long/short equity LAUNCH DATE

CLOVERDALE CAPITAL

STRATEGY Long/short equity

LAUNCH DATE Oct 2014

CAPITAL STRATEGY Long/short equity LAUNCH DATE Oct 2014 SOROBAN CAPITAL PARTNERS NAME Soroban Opportunities Fund

SOROBAN CAPITAL PARTNERS

NAME Soroban Opportunities Fund

STRATEGY Concentrated, “best ideas” long/short equity

LAUNCH DATE Aug 2014

“best ideas” long/short equity LAUNCH DATE Aug 2014 SANDITON ASSET MANAGEMENT NAME TM Sanditon European Select

SANDITON ASSET

MANAGEMENT

NAME TM Sanditon European Select

STRATEGY Europe-focused long/short equity Ucits

MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13
MANAGEMENT NAME TM Sanditon European Select STRATEGY Europe-focused long/short equity Ucits HFMWEEK.COM 13

HFMWEEK.COM 13

COMMENT&ANALYSIS

THE

LONG

VIEW

SCOTT MOSS Clarifying CFTC exemptive relief and guidance

SCOTT MOSS Clarifying CFTC exemptive relief and guidance THERE ARE STILL QUESTIONS AS TO WHETHER SUCH
SCOTT MOSS Clarifying CFTC exemptive relief and guidance THERE ARE STILL QUESTIONS AS TO WHETHER SUCH

THERE ARE STILL QUESTIONS AS TO WHETHER SUCH ACTIONS WILL MARSHAL IN A NEW ERA OF PRIVATE FUND PUBLIC SOLICITATION AND ADVERTISING

E arlier this month, the CFTC issued certain important exemptive relief and further guidance in response to numer- ous industry participant requests to

consider harmonising certain CFTC regula- tions with SEC rules implementing the Jobs Act. These SEC actions (i.e. the issuance of new Rule 506(c) under the Securities Act) elimi- nated a prohibition on general solicitation and advertising for certain offerings made under Rule 506 of Regulation D of the US Securities Act of 1933 and for certain offerings made pursuant to Rule 144A under the Securities Act. The SEC’s actions with respect to the Jobs Act had led some commentators to contem- plate managers of private equity, hedge and other private funds availing themselves of widespread advertising, including television, radio and public transportation advertising, to attract potential investors. Despite such predictions, few private fund managers have availed themselves of these options. One such reason was certain restric- tions set forth in CFTC regulations. Because many private fund managers, or affiliates thereof, engage in commodity inter- ests transactions (which include most swaps

transactions) with respect to the private funds that they manage, such persons fall under the regulatory purview of the CFTC, and, there- fore, generally must register as commodity pool operators (CPOs) and/or commodity trading advisers (CTAs), or avail themselves of applicable exemptions from such require- ments. Private funds managers (or their affili- ates) that rely on CFTC Regulation 4.7(b) or CFTC Regulation 4.13(a)(3) and that con- templated engaging in a Rule 506(c) offering had previously faced a seemingly insurmount- able dilemma imposed by these CFTC regula- tions. The CFTC guidance provides limited exemptive relief from regulatory contradic- tions by harmonising regulations with Rule 506(c) under the Securities Act in certain cir- cumstances. In order for a CPO to claim this exemptive relief, the guidance provides that certain conditions must be met by the CPO, including manual submission to the CFTC of a claim for exemptive relief. While CTAs are not sponsors of private funds and would, therefore, not engage in a Rule 506(c) offering, the guidance may indi- rectly benefit certain CTAs. For instance, CTAs relying on the registration exemp-

tion provided by CFTC Regulation 4.14(a) (8) (which, among other things, provides an exemption from registration for certain CTAs that solely advise CPOs relying on CFTC Regulation 4.13(a)(3)) would still be eligible for such exemption if any such advised CPO engages in a Rule 506(c) offering. Although the guidance was welcomed, there are still questions as to whether such actions will marshal in a new era of private fund public solicitation and advertising due to remaining hurdles such as:

isfy investor sophistication requirements under Rule 506(c), which may provoke adverse reactions from potential inves- tors due to the personal information that would be required to satisfy these steps; requirements and the costs of widely dis- seminated advertisements in relation to the expected amount of investor inflows may not be cost-effective; ties if managers choose to engage in a Rule 506(c) offering with respect to one or more of the private funds that they man- age, while simultaneously engaging in a Rule 506(b) offering (which does not per- mit general solicitation and advertising) with respect to one or more other funds; permissible content of general solicita- tion and advertising materials (e.g., per- formance content), which may limit the effectiveness of such materials; increased visibility brought on by a 506(c) offering; and marketing materials submission require- ment, which also would bring greater regulatory scrutiny and that may dissuade such managers from engaging in a Rule 506(c) offering.

SCOTT MOSS, partner at Lowenstein Sandler

THE SHORT VIEW ALEX CARDNO a.cardno@hfmweek.com T he decision by the California Public Employees’ Retirement

THE

SHORT

VIEW

ALEX CARDNO

a.cardno@hfmweek.com

T he decision by the California

Public Employees’ Retirement

System (Calpers) to pull $4.5bn

of hedge fund investment has

garnered plenty of headlines but there is little evidence it will spark a wave of

similar activity. Bob Jacksha, CIO of the $11bn New Mexico Educational Retirement Board conveyed the views of many when he told me: “What Calpers does is what Calpers does and has absolutely no bearing on what we do”. Calpers’ decision was based on con- cerns about fees and investment com- plexities. These are worries managers

will be used to hearing from investors but also something to keep an eye on. The CIO of another $12bn public pension fund says: “I’m sure this event will bring on a future policy-level dis- cussion. That said, the general conclu- sion of our staff is that we’re getting what we pay for at present.” The State Employees’ Association of North Carolina is pressurising State Treasurer Janet Cowell to withdraw the $288m the state retirement system has invested in hedge funds and there is bound to be more political noise. However, many other US public pen- sion funds I’ve spoken to recently are

maintaining hedge fund allocations, with some increasing them. Rather than a stampede out of hedge funds, a more likely trend is a growing number of pen- sion funds looking to treat hedge funds as possible investments across their portfolio, rather than in a specific ‘alter- natives’ bucket. Calpers’ size, $300bn, sets it apart. Pete Tirp, CIO of Kern County Employees’ Retirement Association, estimates it would have needed to invest $10bn to have a meaningful impact on returns. “There aren’t that many elite hedge funds out there that you can just sock $10bn into,” he adds.

1 4

HFMWEEK.COM

25 SEP

1

OCT 2014

ANY INSIDE INTEL? TIP US OFF AT: insidehedge@hfmweek.com Former PB forecasts smokin’ future Hopes ‘biggest
ANY INSIDE INTEL?
TIP US OFF AT:
insidehedge@hfmweek.com
Former PB forecasts smokin’ future
Hopes ‘biggest business experiment of the 21st century’ will drive exchange
W e hear about staff from
prime brokers spinning
off and launching their
own hedge funds. But
tunity to roll out a “Wall Street-
one former PB is hoping to make
a name for himself through a rec-
reational activity more than likely to
leave your head spinning.
“America’s emerging cannabis
industry is shaping up to be the
country’s biggest business experi-
ment of the 21st century,” begins a
press release penned by Amercanex,
which describes itself as the “first
fully electronic marketplace ex-
change for the cannabis industry”.
The venture is the brainchild of
like” digital commodities exchange
system. It will allow market partici-
pants to monitor and track orders,
activities and transactions and help
growers and retailers to calculate
and deduct fees and taxes.
A real-time interface will offer
Steve Janjic, whose CV includes
stints at Morgan Stanley, Gain
Capital and ACM.
With cannabis now decriminal-
ised in a number of US states, he
hopes he’s spotted a great oppor-
users best sell/buy prices, which it
hopes will stimulate competition
and lower costs in this burgeon-
ing new legalised industry. Market
forces driving down costs so ston-
ers then have more money to spend
on their munchies? We’re sure the
likes of Ayn Rand and Ronald
Reagan would be truly proud.
Leading the way – in the wrong direction
Better late than never for partner who got lost on way to HFM leaders’ summit
T he great and the good of the
European hedge fund sector
some 30 miles south of London at
Pennyhill Park in Surrey.
gathered at The Grove hotel
To spare their blushes, and avoid
in Hertfordshire, England,
any physical retribution, The Inside
last week for the HFMWeek opera-
tional leaders summit, although
some guests took slightly longer to
get there than others.
The hotel (pictured), so in
demand that even the profligate
UK financial regulator decided
to treat its board members to a
£15,000 stay last year, is located
Hedge will be keeping the name of
the embarrassed manager under
wraps. Suffice to say they managed
a convenient 20 miles north of
London.
However, a partner of a nota-
ble UK hedge fund unfortunately
didn’t get the memo and ended up
to make it up to Hertfordshire in
the end to get involved in the heat-
ed industry debates and insightful
discussions, alongside a hotly con-
tested golf competition and a bit
at the location of last year’s summit,
of crossbow and archery action.

THE WEEK IN QUOTES

THE WEEK IN QUOTES WE HAVE TO DEVELOP A BALANCED REGIME THAT DOESN’T THROW OUR MARKETS

WE HAVE TO DEVELOP A BALANCED REGIME THAT DOESN’T THROW OUR MARKETS BACK INTO THE DARK-AGES

David Lawton, director of markets at the FCA, on the challenge ahead with Mifid II and HFT

at the FCA, on the challenge ahead with Mifid II and HFT CURRENT LEVERAGE STRATEGIES ARE

CURRENT LEVERAGE STRATEGIES ARE TOO RISKY AND ARE NOT YIELDING THE RESULTS THAT WERE ANTICIPATED

Retiree Phyllis Elkind speaks out as San Diego’s CERA pension decides outsourced CIO Lee Partridge’s future

WE BELIEVE THIS ACQUISITION IS A PERFECT MATCH
WE BELIEVE THIS
ACQUISITION IS A
PERFECT MATCH

Throgmorton CEO Andrew Rubio on his company’s sale to Capita Asset Services

THIS ACQUISITION IS A PERFECT MATCH Throgmorton CEO Andrew Rubio on his company’s sale to Capita
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Chief executive Charlie Kerr

 

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HFMWEEK.COM 15

FEATURE 20 FOR 2015

FEATURE 20 FOR 2015 As confidence in the hedge fund start-up market builds, HFMWeek examines the

As confidence in the hedge fund start-up market builds, HFMWeek examines the pipeline and lists the 20 freshest launches generating most interest among investors

BY WILL WAINEWRIGHT

T he post-crisis era has proved chal-

lenging for new hedge funds, but

industry participants have become

notably bullish about the start-up

market. “We are in the most robust

hedge fund start-up market since the

crisis – the days of the $1bn launch are well and truly back,” claims Omeed Malik, who heads Bank of America Merrill Lynch’s emerging manager programme and US prime brokerage distribution. “It feels exactly the same here,” says Carl Davey, who runs hedge fund sales for Citi Investor Services in Asia. “We are seeing a good number of new firms led by pedigreed managers, who are building ‘institutional-grade’ infrastructures and attracting significant day-one capital.” The positivity seems to be borne out by the numbers, with several constituents of last year’s list of new hedge funds raising more than $1bn, and at least one – Herb Wagner’s Finepoint Capital – surpassing $2bn. Sources say a “per- fect storm” of factors have combined to provoke the uptick in interest, all of which have impacted HFMWeek’s latest round-up.

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The downsizing of SAC Capital Advisors, since re-named Point72 Asset Management, and clo- sure of Ziff Brothers’ hedge fund investing unit have both had big impacts. Four constituents of this year’s list are being launched by managers who previously held senior positions at Ziff, while three worked at Point72. A further three new firms recently launched by SAC alumni in the UK – Ayora Capital Management, Pagliaro Capital Management and HSE Capital Management – have also generated headlines, but did not make the list. Observers say another factor swelling the launch numbers for new firms is the fact that many brand-name hedge funds are closed to new mon- ey, improving the appeal of new hedge funds start- ed by alumni of those firms. “A number of higher- profile managers here in Asia are soft-closed to new money, which has provided opportunities for new launches to enter the market,” adds Davey. His colleague Carol Teng, who works for Citi’s cap intro team, adds that the rise of new seeding efforts such as HS Group has boosted the mar- ket. “The fundraising environment for new Asian

hedge funds has been helped in particular by the emergence of new seeding ventures.” But while this year’s list features seeding activity from names ranging from Blackstone to Leucadia National Corp, many prime brokers believe seed deals have become less important in the last couple of years. “Founders share classes are becoming much more prevalent and are largely the preferred option,” says Malik. As with the wider industry, long/short equi- ty dominates the strategy composition of the list. “Equity long/short is certainly du jour,” adds Malik. “It is the strategy of choice for investors and also where you are seeing the largest, most high-profile and best-pedigreed start-up managers.” The majority of the ‘20 for 2015’ managers have come from other hedge funds as opposed to banks. “Investors have more confidence in the ‘been there done that’ credentials of man- agers who have been PMs at other hedge funds, but a few continue to make it from other back- grounds,” says Davey. A senior prime broker in London says the failure of Goldman Sachs spinout Edoma Partners, which was Europe’s biggest post-2008 hedge fund launch, has not helped the reputation of bank spinouts. “Managers need the three Ps: pedigree, performance and product,” says Malik. “That gets you in the door. But these managers from brand-name hedge funds fall into two categories – those who were investor facing and those who weren’t. The cream of the crop money managers built LP relationships, and investors were able to build trust in them and their processes. “Investors are much likelier to come in day one to those managers. It separates the $100m launch from the $1bn launch.” That assets total, as ever, remains the Holy Grail for new hedge fund launches. The next 12 months will determine how many of this year’s crop reach it.

ABBERTON CAPITAL MANAGEMENT

FOUNDER: Fredrik Juntti

FOUNDED: April 2014, London

One third of the founding trio behind Montrica Investment Management, a pre-crisis success story later swallowed up by TPG Axon, Juntti is returning with Abberton Capital Management, a highly tipped London-based start-up. His earlier co-founders are coincidentally also launch- ing ventures this year – Svein Hogset with Incentive AS in Norway and Andrew Metcalfe with Lakefour Investment Management in Switzerland – but sources say Abberton looks set to raise the most backing. Meditor Capital Management COO Craig Simkins has been brought on to run operations for Abberton, an activist investment firm, which was planning to launch next quarter with assets of around

$200m.

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ARAVT GLOBAL

FOUNDER: Yen Liow

FOUNDED: October 2013, New York

After launching early this year, Liow

is now running more than $1bn with

Aravt, which was the first large-

scale launch to emerge from the closure of Ziff Brothers’ hedge fund investing unit. Liow spent 12 years

at the family office, where he man-

aged a range of long/short equity investments ranging from global media and telecoms to agricultural commodities and energy. His COO is Thomas Hoban, who has worked for

a range of firms including Vinik Asset Management and Signpost Capital.

ARKKAN CAPITAL MANAGEMENT

FOUNDER: Jason Brown

FOUNDED: December 2013 (SFC registra- tion), Hong Kong

The long-awaited start-up from Brown, who led global special situ- ations investing for Goldman Sachs, was reported earlier this month to have won backing worth up to $200m from Blackstone. A prime broker says the offering, which start- ed trading in August, is the biggest new bank spinout in Asia. It follows Senrigan Capital Group as only the second new Asian hedge fund to win Blackstone’s backing since the financial crisis.

BANBURY PARTNERS

FOUNDERS: Baker Burleson, Stormy Scott FOUNDED: April 2014, Charlotte, N Carolina

Burleson and Scott – two managers previously with ‘Tiger cub’ firms – have joined forces to launch what could be termed the ultimate ‘Tiger grand-cub’. Burlseson is CIO of the new long/short equity venture after eight years with Fox Point Capital Management, while Scott is presi- dent and COO after seven years with Hound Partners. Their new venture was reportedly targeting a $300m fundraise for its launch next quarter.

BOSVALEN ASSET MANAGEMENT

FOUNDER: Ken Xu

FOUNDED: August 2014 (SFC registration), Hong Kong

Xu left the Asia office of Steve Cohen’s Point72 Asset Management

earlier this year and is preparing a hedge fund generating considerable buzz among industry participants

in the region. The Och-Ziff and

Goldman Sachs alumnus managed money for more than three years

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at SAC/Point72 and is preparing a

long/short equity firm. “That is the Point72 spinout generating the most interest in Asia,” says one manager.

Another former SAC manager gen- erating interest with a new Asian hedge fund is Andrew Bazarian.

DARSANA CAPITAL

PARTNERS

FOUNDER: Anand Desai

FOUNDED: January 2014, New York

Former Eton Park manager Desai

raised more than $1bn for the launch of Darsana in June, making

it one of the year’s most success-

ful launches. A service provider describes the launch as “a thing of beauty” in terms of its institutional build-out and success with inves- tors, adding that Desai could have raised more had he wished. Desai spent nine years at Eton Park having worked for Eric Mindich’s firm since its 2004 launch. Former colleagues Dan Irom and George Saalouke were among his recruits at Darsana, which deploys a long/short equity strategy.

FOLGER HILL ASSET MANAGEMENT

FOUNDER: Sol Kumin

FOUNDED: August 2014, New York and Boston

Kumin was at SAC Capital for a decade until leaving his role as COO earlier this year to launch Folger Hill. His planned firm has secured one of the year’s biggest seeding deals from Leucadia National Corp, which has agreed to allocate $400m

if Kumin can match that sum with

contributions from elsewhere. The company will reportedly get almost half of Folger Hill in return for the commitment. Todd Rapp left his role as chief risk officer at Highfields Capital Management to co-found the firm. It hopes to raise a total of more than $800m to be allocated among different trading teams.

IMMERSION CAPITAL

FOUNDER: Michael Sidhom

FOUNDED: April 2014, London

Sidhom is lining up Immersion with

guaranteed backing from his former employer, Ziff Brothers, making it one of the London market’s most- tracked start-ups. He spent almost

a decade managing money for the

family office’s Europe office and was

one of its most senior managers. Jim Kandunias, the former Esemplia COO, has been hired to lead a new

operations team but Sidhom has brought his investment team over to Immersion, an equities-focused venture. Ziff Brothers became a force in the hedge fund space despite not accepting outside money – meaning the new wave of start-ups from ex-Ziff talent opens them up to investors widely for the first time. A senior prime broker says Sidhom’s ex-colleague David Fear, who was Ziff’s most senior manager in Europe, is another one to watch. Fear registered a name – Thunderbird Partners – in May and

given his calibre can expect to raise at least as much as Sidhom from Ziff and other investors.

KONTIKI CAPITAL MANAGEMENT

FOUNDER: Gregard Heje

FOUNDED: April 2014 (SFC registration), Hong Kong

The closure of the Ziff Brothers hedge fund unit makes its pres- ence felt in Asia too, with the family office’s former head of investing in the region behind one of Asia’s most-tipped hedge fund start-ups. Heje spent almost a decade at Ziff and has been backed by them for his pan-Asia long/short equity fund. “Kontiki is generating a lot of interest, no question,” says a prime broker in the region.

MELVIN CAPITAL

FOUNDER: Gabriel Plotkin

FOUNDED: April 2014, New York

Plotkin is leading one of a clutch of new hedge funds to emerge from

the SAC/Point72 stable. What makes Plotkin’s venture stand out is the $200m backing he has reportedly won from his former boss Steve Cohen, who at times entrusted him to manage more than $1bn of his firm’s capital. A prime broker says Cohen’s backing is “very unique” and considerably enhances Plotkin’s chance of success. “The average SAC spinout has a lot of difficulty because of the reputation,” the person adds, referring to the dam- age done to SAC by repeated insider trading scandals. Plotkin named his firm after his grandfather, it emerged this summer.

PAGODA ASSET

MANAGEMENT

FOUNDER: Adam Bernstein

FOUNDED: May 2014, New York

Bernstein was a portfolio manager at Highbridge Capital Management

for almost nine years before leaving

in March to build Pagoda, which will

deploy a long/short equity strategy for its launch next quarter. He has brought Mark Hoffman, an 11-year Highbridge veteran who headed up global equity trading, with him as COO. Bernstein led Highbridge’s

investing effort in the technology, media, telecommunication (TMT) and consumer sectors. A prime bro- ker said that pedigree gives Pagoda

a good chance of success.

PERDURANCE ASSET MANAGEMENT

FOUNDER: Ivan Briery

FOUNDED: March 2014, Jersey

Briery was a star of the industry’s pre-crisis era, making millions with Voltaire Asset Management, the firm he co-founded in 1997 with Laurent Saglio, who went on to found Zadig Asset Management. Their timing was perfect, as for eight years the pair scored bumper returns before closing well before the financial cri- sis hit – allowing Frenchman Briery to retire at the age of 40 to “devote myself to my family”. However, the one-time Soros manager is mak- ing a comeback with Jersey-based Perdurance with potential launch assets thought to be in the region of $500m.

PLEIAD INVESTMENT ADVISORS

FOUNDER: Ken Lee and Michael Yoshino FOUNDED: June 2014 (SFC registration), Hong Kong

Former Asia specialists for Soros Fund Management, Lee and Yoshino have joined forces to start

a new firm trading Asian equities.

Pleiad Investment Advisors won backing from the HS Group, one of several seeding firms improving the fundraising picture for Asian hedge

funds. The founders also worked together at Tiger Asia Management, making this another new firm with links to Julian Robertson’s hugely influential hedge fund firm. HS Group is part-owned by TPG Capital and was set up by ex-Blackstone and Goldman Sachs professionals.

PRIMESTONE CAPITAL

FOUNDER: Franck Falezan, Benoît Colas and Jean-Pierre Millet

FOUNDED: March 2014, London

Few impending launches – not just in Europe but globally – can beat Primestone for pedigree. The trio behind one of London’s most

HFMWEEK.COM 17

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PERFORMANCE

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FEATURE 20 FOR 2015

WHERE ARE THEY NOW? THE CLASS OF 2014

Anderson Global Macro: Macro firm founded by Keith Anderson, formerly a BlackRock and Soros heavyweight, now manages $600m. Argentière Capital: Deepak Gulati’s Switzerland-based firm now manages $600m. Canosa Capital: Tim Attias and Santiago Alarco’s macro fund was the only European firm out of last year’s batch to raise more than $1bn and now manages $1.045bn. East Lodge Capital: Most recent reported asset figure for ex-CQS manager Ail Lumsden’s firm was around $500m. Finepoint Capital: The biggest launch on last year’s list, ex-Baupost manager Herb Wagner is reported to have attracted launch assets in the region of $2bn. Foxhaven Asset Management: Michael Pausic founded one of last year’s most-tipped launches after 16 years with Maverick. Latest AuM unknown. Junto Capital Management: Ex-Viking manager Jim Parsons was said to have launched in January with around $500m. Nettleton Capital: Former Eton Park star Rob Dafforn won launch backing of around $150m from Blackstone. Latest AuM unknown. Nordkinn Asset Management: The Scandinavian firm now manages $160m after launching last year. Princeton Alpha Management: Shakil Ahmed won backing from Blackstone worth $250m on launch last year. Latest AuM unknown. Rock Springs Capital: One of the list’s smaller constituents, former T. Rowe Price man- ager Kris Jenner reportedly launched with $100m last year. Latest AuM unknown. Roystone Capital Management: Founder Rich Barrera quickly raised around $400m last year. Latest AuM unknown. Salt Rock Capital Partners: Former Caxton Associates manager Mark Painting now man- ages more than $300m in his London-based start-up. Sarissa Capital Management: Alex Denner, previously a senior manager at Icahn Associates, launched with backing from Meritage Group last year. Latest AuM unknown. Stewart Asia Investment: Ex-Tudor manager Andrew McMillan launched Stewart Asia in Singapore last year. Latest AuM unknown. Symmetry Investment Management: Industry sources regard the Millennium-backed start-up, which attracted more than $1bn, as Asia’s biggest recent hedge fund launch. Three Bays Capital: Matthew Sidman, formerly of Highfields Capital, launched Boston- based Three Bays on 1 January and assets have reached $1.5bn. Tse Capital Management: Irene Tse’s firm was said to launch with around $450m last year. Latest AuM unknown. Waterfront Capital Partners: Eduardo Abush departed Millennium Management to launch Waterfront. Latest AuM unknown. Wingspan Investment Management: After launching last year, Buckley Ratchford’s New York firm now manages $835m in its flagship macro fund.

closely-watched launches have all had long and senior careers with The Boston Consulting Group and more recently Carlyle Group. Millet was founder of the private equity giant’s Europe office. It describes itself as a “constructive active manager” and will target companies in the European mid-cap space. It expects to launch next quarter with between $400m and $600m – including hefty contribu- tions from the founders. UBS is prime broker for the fund, which will not short securities. “The real deal,” says one prime broker who is not working with the firm. “You just know

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they will do well.”

SAFERIDGE

CAPITAL

PARTNERS

FOUNDER: Paul Saferstein

FOUNDED: May 2014, New York

Saferstein is setting up Asia- focused Saferidge after eight years with Asian Century Quest Capital, which is clos- ing down after redemptions shrank the business from

a $2bn peak in 2012. His

launch, scheduled to start

trading in Q4, will make long/short equity invest-

ments across Asia but have

a particular focus on Japan.

The closure earlier this year of Joho Capital, a $5bn New York hedge fund focused on Asia, left a gap in the space

and will help Saferstein generate interest, according to one industry observer.

SENTINEL DOME

PARTNERS

FOUNDER: Munir Alam

FOUNDED: February 2014, San Francisco

Tipped by one prime broker as potentially the “biggest West Coast launch of 2014,” Sentinel Dome is being set

up by an eight-year veteran of Farallon spinout Watershed Asset Management. Alam was co-portfolio manager and managing member there

before leaving in January this year to launch his new firm, which will make event-driven investments across the capi- tal structure.

SEVEN HARBOUR

GLOBAL

FOUNDER: Sean Grogan FOUNDED: October 2013, New York

The new firm being set up by Grogan, who spent almost six years at Conatus Capital Management, has generated multiple head- lines this year with hires that indicate his start-up firm Seven Harbour has grand ambitions. Rob Sachs was recruited to lead busi- ness development from Bank of America Merrill Lynch, where he headed global cap intro, while CFO Jay Maymudes was prised away from Wexford Capital after almost 20 years. Like several on this list, Seven Harbour deploys a long/ short equity strategy.

SOPHOS CAPITAL

MANAGEMENT

FOUNDER: Jim Carruthers FOUNDED: November 2013, New York

Carruthers is a former part- ner of Third Point founder Dan Loeb, which goes some way to explaining why his plan to launch

a short-bias hedge fund

has been generating buzz among investors. “I can tell you that I think he’s got the real stuff,” says one prime broker, adding that the short-bias strategy makes

it stand out to investors. He

spent eight years managing money for Third Point, which was recently reported to have quickly raised a further $2.5bn. If Carruthers can tap into that appetite, he could lead one of this year’s larg- est launches with Sophos, which was planning to launch in the second half of 2014.

SQUAREPOINT

FOUNDERS: Gregoire Schneider, Olivier Durantel, Maxime Fortin and Antoine Fillet FOUNDED: May 2014, London

The spinout of the nQuants systematic trading unit from Barclays has generated much attention in industry circles this year. Key indi-

viduals involved in the proj- ect incorporated the name Squarepoint in London in May, although the venture

is

have offices globally with

around 60 employees. It

is

supports the breakaway of the unit into a new firm although it will reportedly not seed or take a stake in the venture. Chris Newman has been brought on board after almost 20 years at Millennium Management, where he was head of operations.

reportedly planning to

understood Barclays

TWO CREEKS

CAPITAL

MANAGEMENT

FOUNDER: Ryan Pedlow FOUNDED: 2014, New York

Pedlow was reported by the Wall Street Journal to have raised $1.5bn for its launch this summer, mak- ing it one of the biggest hedge fund launches since 2008 and the largest offer- ing to emerge from the Ziff Brothers stable. Pedlow was

a key stocks manager at

the New York-based family office and his new firm is also equities-focused. The fund charges fees of 1.5/20, according to its SEC bro- chure. Former Tiger, Viking and Saba executive Carl Casler was appointed CFO while Richard Wandner, who spent 12 years at Viking, is head of operations.

CRITERIA

To qualify for consideration, hedge fund management firms must have been registered in the 12 months between 1 September 2013 and 31 August 2014 (in Asia, the SFC registration date was used). The chosen 20 are those deemed most likely to achieve significant future success, based on conversations with a diverse range of senior industry professionals and HFMWeek’s editorial judgement.

HFMWEEK.COM 19

FEATURE JOBS ACT

FEATURE JOBS ACT WHO WANTS TO BE AN more aggressive through press releases, newspaper ads and

WHO WANTS TO BE AN

more aggressive through press releases, newspaper ads and the media,” he says. Massachusetts-registered Lemelson Capital Manage- ment is among these firms. Chief investment officer Em- manuel Lemelson says he saw the Jobs Act as an opportu- nity to speak freely “without having to choose every word carefully”. “We were getting good results and I thought why don’t we publicise that?” he adds. The firm now sends out press releases on its performance and had secured four inter- views with the press that week.

TALKING TO THE PRESS Speaking to the media is a key reason to tick the box to generally solicit, say experts. Prior to the Jobs Act, hedge fund managers could talk about the manager and their strategy but not the specifics of the fund to the media. However, this was seen as a very grey area. “It depended on what law firm you spoke to – some law firms previously did not feel comfortable with hedge funds putting any- thing out there,” says Don Steinbrugge, managing partner at third-party marketer Agecroft Partners. And lawyers say that while many hedge fund manag- ers are not interested in TV commercials or billboards at the Super Bowl, many are interested in speaking about performance to the press. “In the past if a reporter called you with incorrect data on your fund, you were not even allowed to correct them because of the anti-solicitation rules,” says one US lawyer. Max Hilton, director at PR firm Peregrine’s New York

SEC TARGET?

Despite the CFTC’s recent shift to allow general solicitation, lawyers say take-up of the Jobs Act’s advertising flexibilities is likely to be limited