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News, aNalysis aNd CommeNtary

Hedge Funds


Arrowhawk’s Fan Said to Start Arbalet Capital
arrowhawk capital Partners’ Jennifer fan will start arbalet capital llc on April 1 with at least $500 million, according to two people with knowledge of the hedge-fund manager’s plan. Arbalet, based in Darien, Connecticut, will employ the same commodities swaps trading strategy Fan and her team have used since September 2009, said one of the people. Fan’s strategy returned 14 percent this year through November, according to the second person. Arrowhawk, which has assets of $575 million and is also based in Darien, is winding down because it failed to raise as much capital as hoped, Absolute Return+Alpha reported on its website Dec. 20. michael litt, previously a partner at frontpoint Partners llc, started the firm in 2008. The multi-strategy fund, which will redeem investors by March 31, returned 0 percent and 1 percent in 2011 through Nov. 30, depending on the share class, the second person said, compared with a decline of 1.8 percent for the category. Fan referred questions to Kristin mott, an Arrowhawk spokeswoman, who declined to comment. The new firm will retain 10 people from Arrowhawk, including Ken brown, who will be chief operating and financial officer, and rich itri, who will be chief information and technology officer, according to an investor presentation from Arbalet that was obtained by Bloomberg News. Arbalet will hire two new people, including a chief executive officer, the second person said. Litt, Arrowhawk’s chief investment officer, won’t be joining Arbalet, the person said. Arbalet, named for a type of crossbow, will retain credit suisse ag, Arrowhawk’s prime broker, and rothstein Kass, its Jennifer Fan auditor, according to the person. Commodity hedge funds attracted $8.66 billion from investors in the year’s first 11 months, according to New york-based eVestment|HFN. Assets under management rose 6 percent to $82.7 billion, the firm estimated. Opening a commodity hedge fund is becoming more difficult because managers need to comply with more demands from clients, said marcus storr, head of hedge funds at feri trust gmbh in Bad Homburg, Germany. “you need more money to launch, you need more professional backup,” said Storr, whose company manages about 16 billion euros ($20.7 billion) of assets, including investments in 12 commodity hedge funds. A new fund probably needs to raise about $100 million from investors to generate the income needed to pay for expenses such as offices and trading systems, said david mooney, the CIO of schroders newfinance capital in London, who has been involved in commodities for more than two decades.
six degrees of tiger management A chart tracking some of the 30-plus “Tiger cubs” and their offspring. page 4 aib to add event-driven managers The Dublin-based money manager will add the UCITS-compliant funds to its hedge fund holdings this year. page 5 returns in brief The Eurekahedge index was down 4.1 percent in 2011, its first decline since 2008. page 2 cqs’s love to start ucits fund at gam Tim Love has left CQS and will start an emerging markets UCITS fund for GAM next month. page 5 13f forensics: sears holdings Hedge funds were net sellers of the largest U.S. department store chain’s shares during the three months ending September 30. page 6 fortress to launch tmt hedge fund The Fortress TMT Fund will be managed by former Galleon Group portfolio manager Peter Swartz. page 3 dealers tighten terms on funds: fed Wall Street dealers are making it tougher for hedge funds to finance trading of securities and derivatives, a Federal Reserve survey showed. page 7 over the hedge Steve Cohen to bid for LA Dodgers, Paulson expands black-tie “portfolio.” page 8 calendar pages 9-10 sPotlight First Eagle Investment Management Portfolio Manager Jason Dahl discusses his views on merger arbitrage opportunities. page 11

– With assistance from Chanyaporn Chanjaroen in Singapore and Lars Paulsson in London.

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Firm Pavilion Capital Pte Czech asset management lP, old Greenwich, Connecticut Fund(S)/StrAtegy to invest in privately-held firms in North asian markets. sJC onshore direct lending Fund i onshore direct lending Fund ii portFolio mAnAger(S) tow Heng tan stephen Czech expeCted Aum At lAunCh N/a $1.1 billion $750 million lAunCh dAte(S) N/a January may

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12 Bloomberg Brief | Hedge Funds 2 returnS in BrieF ■ John Paulson lost 10.3 3.1 -3.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC.8 -2.1 3. Hedge Funds Funds of Funds S&P 500 15. ■ tufton oceanic ltd.6 percent in its Master Fund through Nov.4 4. The $27 billion fund had its worst year in 2010.3 0.8 -0.1 7.6 4.1 -1. 30 last year.8 -1.2 13.1 7.5 percent in 2011.90%* 2. 2010 through Dec. ■ brevan howard asset management 212-617-1097 contributing Katherine Burton reporters kburton@bloomberg. gained 212-617-2741 Melissa Karsh mkarsh@bloomberg. the hedge fund founded by alan howard. which is heavily invested in precious metals and the mining industry.9 2011 through nov. 01.1 -0.08% 609-279-5084 newsletter Nick Ferris business manager nferris2@bloomberg. 26.0 -1. Please contact our reprints and permissions group listed above for more information.1 percent in 2011.4 5. -3.5 billion Oceanic Hedge Fund gained 6.8 percent in the first 11 months of the year.’s $1.8 -2.3 1. according to people familiar with the funds’ performance.0 212-617-2309 bloomberg news Rob Urban managing editor robprag@bloomberg.3 -0.11% *from Feb. 28.3 1. 212-617-4557 reporter Kelly Bit kbit@bloomberg.6 -0.4 -11.7 212-617-6975 reprints & Lori Husted Permissions lori.3 -6.79% hedge fund returns Bloomberg BAIF indices.6 -1.0 -1. gained 6 percent after launching in May 1. Baker editors nbaker14@bloomberg. 1 2 3 4 5 6 7 8 9 10 11 .18% 3.7 © 2011 Bloomberg LP. 2010 ■ The Eurekahedge Hedge Fund Index was down 4.8 -6. 20.3 3.4 -4. gained 12. The Singapore-based firm’s long Asian volatility and arbitrage fund LAVA.3 2.46% 1. All rights reserved. which represent all funds tracked by Bloomberg data.1 hedge funds Nathaniel E.6 -1. according to the report.2 -0.5 0.03. Vulpes is run by stephen 609-279-5064 Anibal Arrascue aarrascue@bloomberg.2 -1. The benchmark measure fell for the first time since 212-617-5192 –Source: Bloomberg News returnS By StrAtegy StrAtegy mortgage-Backed arbitrage Fixed income arbitrage asset-Backed securities Capital structure arbitrage Convertible arbitrage short-Biased equities market-Neutral Cta/managed Futures multi-strategy merger arbitrage long/short equities equity statistical arbitrage Global macro emerging market debt distressed securities long Biased equities Source: Bloomberg Hedge Fund Indices Type HFND<GO> to view return statistics BloomBerg index Code BBHFmarB BBHFFarB BBHFastB BBHFCred BBHFCarB BBHFsHrt BBHFmNFl BBHFmGdF BBHFmlti BBHFmerG BBHFlseQ BBHFstat BBHFmCro BBHFemdB BBHFdist BBHFloNG 2010 24.06% 2010 total returns 2-Year Treasuries (Merrill Lynch Total Return Index) 2011 YTD total returns 8.47% 1. The Russian Opportunities Fund declined about 10 percent in the same period. when it dropped a record 10 percent. 30 10.6 11.0 oCtoBer 2011 0.8 -4.1 9.3 -1. This newsletter and its contents may not be forwarded or redistributed without the prior consent of Bloomberg.1 -9.1 212-617-6975 advertising bbrief@bloomberg. Eurekahedge started compiling the industry’s data in 2000.7 717-505-9701 To subscribe via the Bloomberg Professional Terminal type BRIEF <GO> or on the web at www.0 3. bloomberg brief hedge funds newsletter Ted Merz executive editor 212-617-6662 contributing Matthew Kelly data editors mkelly17@bloomberg. the Singaporebased data provider said in an e-mailed statement today.1 -2. ■ vulpes investment management’s Testudo Fund.5 percent in his Gold Fund and 35 percent in his Paulson Advantage Fund for the period from Dec. are the source of the below hedge fund and fund of funds 212-617-2335 Saijel Kishan skishan@bloomberg. when it returned 1 percent.

54.5 percent with an 18 percent performance incentive and the second 2 percent and 20 percent. michael Kwon. He was hired in 2010 as a managing director and equity analyst covering technology. according to the presentation. Taiwan.6 billion in assets under Earn up to 14 CPE Tax Credits * January 19 & 20. previously at deutsche bang ag’s principal investments group in Vietnam. 2012 1 2 3 4 5 6 7 8 9 10 11 . which will make bets on technology. a former galleon group llc portfolio manager. Securities and Exchange Commission over his role as the former head of Fannie Mae. Midtown Manhattan To Register: Call 800-280-8440 or visit us at www. Fortress Chief Executive Officer daniel mudd last month took a leave of absence following a lawsuit by the U. Rajaratnam.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC. Swartz has been a senior portfolio manager for the Fortress Asia Macro Fund since March. will be vice president and equity analyst. will be an equity analyst.2 percent since March. korea and Japan.S. according to the presentation.S. who will be managing directors of the fund. Levine and Abburi. according to a December investor presentation. —With assistance from Nathaniel E. Swartz will be chief investment officer of the Fortress TMT Fund. is starting a new technology hedge fund for fortress investment group llc. were hired by Fortress in March 2010. media and telecom for the Fortress Macro Fund. Attend One Conference or Both! Financial Research Associates and the Hedge Fund Business Operations Association Proudly Presents Hedge Fund Tax 101 AND The K-1 Boot Camp Innovative Strategies to Maximize Tax Efficiency The Princeton Club. with the rest allocated to Europe. China. The publicly traded firm has $43. media and telecommunications stocks. 01.03. Galleon was the target of a nine-year investigation by U. trang Pham. Former Galleon colleagues michael levine and murali abburi will join him on the fund as equity analysts. the presentation says.frallc.12 Bloomberg Brief | Hedge Funds 3 Fund FoCuS ex-galleon manager peter Swartz to Start technology hedge Fund for Fortress By SABRINA WILLMER Peter swartz. which didn’t include a fundraising target. last month began serving an 11-year sentence at a federal prison in Massachusetts. it adds. He was replaced on an interim basis by randal a. gordon runte. declined to comment. companies. officials. according to the presentation. private equity and other investments.S. culminating in the May conviction of co-founder raj rajaratnam on insider-trading charges. a copy of which was obtained by Bloomberg News. The fund will have two share classes. The Fortress Asia Macro lost a net 1. nardone. The fund expects to take about 25 long and short positions. Baker in New York. the company’s cofounder. formerly of ubs ag. the first charging a management fee of 1. The new fund will invest as much as 50 percent of its assets in U. including hedge funds. a spokesman for New B809HalfPageAd:Layout 1 11/17/11 12:57 PM Page 1 york-based Fortress.

01. While the information is deemed to be accurate. was not included in the chart. starting in the “12 o’clock position” with lee ainslie’s maverick capital management lP. it may not be comprehensive or exhaustive. The chart on the right displays some of this movement. who started tiger global lP in 2000. Baker Lee Hobson Highside Capital Lee Ainslie Maverick Capital Bob Bishop Impala Asset Management (via Soros Fund Management) Roberto Mignone Bridger Management John Thaler JAT Capital Marc Andersen.03. chase coleman. Bloomberg Markets reports in its February issue. In a few instances.12 Bloomberg Brief | Hedge Funds 4 Six degreeS oF tiger mAnAgement Julian robertson’s tiger management has spawned at least 30 so-called Tiger cubs--fund managers who are Tiger Management alumni. –Nathaniel E. Eliav Assouline Axial Capital 1993 David Gerstenhaber Argonaut Capital David Saunders K2 Advisors John Griffin Blue Ridge Capital Matt Crake Greenheart Capital Paul Hudson Glade Brook Capital Ashwin Vasan Trend Capital 2011 Chris Shumway Shumway Capital† Larry Bowman Bowman Capital† Robert Karr Joho Capital 1997 Steve Mandel Lone Pine Capital Steve Shapiro Intrepid Capital Tom Wilcox Cider Mill Rob Ellis Ridgefield Capital Tiger Management Julian Robertson Tom McAuley North Sound Capital 1998 2001 1999 Rob Ellis & Paul Touradji Catequil Asset Management† James Lyle Millgate Capital† Paul Spieldenner. The “first degree” of separation from Tiger then continues chronologically in a clockwise rotation. Some “seconddegree” movement is also displayed in this fashion.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC. The information was compiled from Bloomberg News and other reports and individuals’ career histories as displayed on their Bloomberg biography pages. LinkedIn accounts were used to verify or source dates. Quinn Riordan Bamboo Capital † 2004 Quinn Riordan Elmwood Advisors Paul Touradji Touradji Capital Peter Vig Roundrock Capital 2001 Phil Duff & Mike Kelly FrontPoint Partners Patrick Earle KiCap † 2000 Philippe Laffont Coatue Rob Citrone Discovery Capital 2000 Tom Brown Second Curve Capital Dan Morehead Atriax† Andreas Halvorsen Viking Global Phil Duff Duff Capital Richard Davies JGL Investments 2005 Martin Hughes Toscafund John Lykouretzos Hoplite Capital Dan Morehead Pantera Capital Anson Beard Archimedes Capital Kris Kristynik Longhorn Capital † Firm no longer in business 1 2 3 4 5 6 7 8 9 10 11 2000 2003 . with the year of launch drawn on or near the corresponding arrow.

Love said about the new fund. Comptroller thomas dinapoli is the sole trustee and manager. according to eugene Kiernan. On a total return basis. and the future of commodities largely depends on whether Europe and U.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC.” in a telephone interview. in Newport Beach. AIB will also consider equity market neutral. He does not have a replacement yet at CQS. most of whom are pension funds.y. snapping two consecutive three-month drops. Twelve of the 24 raw materials tracked by the S&P GSCI rose last week. resigned to pursue other opportunities. The firm will analyze whether a hedge fund’s strategy can work in a UCITS framework. Soybean holdings jumped more than ninefold and those for corn reached a five-week high. in a telephone interview. the first annual drop since 2008. Baker n. futures and options increased by 18 percent in the week ended Dec. Money managers have cut bets on higher prices by 65 percent since this year’s high in April.S. “We have seen people reducing risks. Cotton climbed 5. At GAM. Speculators trimmed bets on declining prices for copper. 27.” said he’s “very excited to be at GAM.” said nic Johnson. —Kelly Bit Hedge funds and other large speculators increased long commodity bets by the most since August 2010. kiernan said in a telephone interview.” he said. spokesman for the Office of the State Comptroller.2 percent last year.S.2 percent. currency. can avoid a recession. and soybean oil and meal. head of investment solutions. “We opted to go long-biased due to valuation in emerging markets. global macro.” he added. putting the chances of “EU shock” at around 30 percent. “We’re not out of the Tim Love woods on EU risks but emerging market equitities look compelling.2 percent last year. has left the firm and will join gam holding ag in London next month where he will launch a UCITS fund. It will likely be focused on Asia and Latin America with a “Mid East overweight bias. kiernan said. Commodity Futures Trading Commission data show. Love said he will report to david solo. —Kelly Bit mAndAteS AiB to Add event-driven uCitS-Compliant Funds aib investment managers ltd. cocoa. director of opportunistic investments at the new York state common retirement fund.S. Davidson was previously principal at the teacher retirement system of texas. managed futures and commodities funds that are UCITS-compliant. is searching for one or two event-driven UCITS-compliant funds to add to its hedge fund holdings early this year. Start uCitS Fund tim love. AIB’s only restriction regarding assets is that it prefers that its allocations comprise more than 10 percent of a hedge fund’s size. The fund invests about $140 billion for more than one million employees and retirees from New york state governments.. trend wAtCh hedge funds raise bullish bets by most in 16 months By DEBARATI ROy —Nathaniel E. Sumberg did not provide details. Love said. He was also a director of financial institutions at Standard & Poor’s.2 percent. who was at CQS for “a material period. which surged 6. While the Standard & Poor’s GSCI Total Return Index of 24 commodities declined 1. The S&P GSCI Total Return Index rose 9 percent last quarter.12 Bloomberg Brief | Hedge Funds 5 BrieF exCluSiveS on the move CQS’s tim love to Join gAm. who was cqs uK llP’s senior portfolio manager for emerging markets.677 contracts. commodities lost 1. AIB typically invests about 15 million to 30 million euros initially and has about $850 million in alternative assets. AIB prefers daily liquidity. Silver. A measure of 11 U. the Dublin-based money manager with 8. farm goods showed speculators increased bullish bets in agricultural commodities by 35 percent to 273. The GAM Star Emerging Equity Fund will launch by the end of the first quarter. 1 2 3 4 5 6 7 8 9 10 11 . Love. it rallied 12 percent from a 10-month low reached in October on mounting optimism about growth. a request that comes from its clients. oil in New york and heating oil rose at least 2 percent today. the biggest gain since July 2010. said eric sumberg. California.” which are at levels not seen since the first quarter of 2009. cocoa.03. State Common retirement Fund’s davidson resigns charles davidson. Combined net-long positions across 18 U. wheat. 01. research analyst at axa alternative advisors llc and associate at the canadian imperial bank of commerce.4 billion euros ($11 billion) in assets. who helps manage $30 billion in commodity assets at Pacific investment management co. Gains were led by wheat traded in kansas City.

tiger global management llc sold 310.12 Bloomberg Brief | Hedge Funds 6 13F ForenSiCS: SeArS holdingS Hedge funds were net sellers of sears holdings corp.200 13 7 221.358 -6 0.3 Great oaks Capital management 59.128 3 2 18.229 -4 4.000 people as of January. Sears employed 312.6 1 2 3 4 5 6 7 8 9 10 11 . closing 171 large U. according to data compiled by Bloomberg.680 3 2 -3. according to the International Council of Shopping Centers. 49. the most of any of the retailing company’s shareholders.063. 100. 25.317 11 6 -310. By contrast.523 shares on aggregate. Baker. esl Partners Founder edward lampert.2 percent in the eight weeks ended Dec.145 64 35 390.200 100 2. stores and cutting the headcount by about 12 percent. down from 355.3 Fine Capital Partners lP 221. Kinetics asset management inc. 2. lampert 17. 1.03.8 rmB Capital management llC 53.683 -62 0.887 6 3 0 0 0.S. has reduced costs since becoming chairman in 2005.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC.000 5 3.131 161 89 -119. has presided over 18 consecutive quarters of declining sales. 30* vAlue on deC.2 water street Capital inc.418 54 2. On Dec. such sales in the department-store sector will climb an estimated 4 percent in November and December. Meanwhile.556 981 542 0 0 N/a Horizon asset management inc. –Nathaniel E. 01. Cotten Timberlake and Miles Weiss largest hedge fund shareholders as of september 30 Fund Amount held vAlue on Sept.804.683 shares of the largest U. department store chain’s stock during the three months ending September 30.9 empyrean Capital Partners lP 889. 30* lAteSt ChAnge (ShAreS) lAteSt ChAnge (perCent) perCentAge oF portFolio edward s.4 Hanawalt associates * $millions 35. Lampert.908 51 28 45.S. 28. Sears reported that it would close as many as 120 locations after same-store sales fell 5. reducing its position by 62 percent. his hedge funds have made money on the original investment.019 2 1 0 0 0.418 shares during the quarter. Bloomberg data shows. a New york-based trade group. the most among all shareholders.1 tiger Global management llC 189. stock in the third quarter.8 Kinetics asset management inc. the company’s largest shareholder. compared with the same period a year ago.800 47 1.000 in June 2006.116. divesting 466. added 390.

covering June through August. who didn’t admit or deny wrongdoing. trading real estate investment trusts and nonfinancial corporations. in an e-mail. showed that 86 percent of respondents reported the number of dealers tightening financing rates outnumbered those easing. a spokesman for the funds.a proposal on defining the fiduciary duty of broker-dealers and adoption of a conflicts-of-interest ban in assetbacked securities deals. Rothstein. shifting expected approval of a number of Dodd-Frank Act rules from a January-June time frame to July-December instead.” the Fed said. 3. 49. such as financing rates.” the Fed said. he testified. 2010 when. About one-third of respondents tightened pricing terms. and in fact that’s what we did. 2010. $50. At the same time. The prior survey.” said John nester. Transcripts are being released on the website of the plaintiffs’ law firm conrad & scherer.” Wall Street dealers made it tougher for hedge funds to finance trading of securities and derivatives in the three months through November.000 for “acts detrimental” to the marketplace for a Feb. according to the disciplinary notice.767 orders for March 2010 crude futures. considering the entire range of transactions with such clients. fed says dealers tighten terms on hedge funds By SCOTT LANMAN. Securities and Exchange Commission is delaying action on rules for regulating derivatives and credit-rating firms until the second half of 2012. fined neil brookes.03.S. while one-fourth reported tightening nonprice terms including maximum maturity. The revision also removed two items from the calendar -. He couldn’t be reached for comment. malfunction. Respondents reporting tougher borrowing terms for hedge funds “most frequently pointed to a worsening in general market liquidity and functioning and to reduced willingness to take on risk and. when he could no longer pay customers. —Susannah Nesmith 1 2 3 4 5 6 7 8 9 10 11 . MATTHEW LEISING —Jesse Hamilton Cme Fines infinium oil trader for high-Speed trading error cme group inc.45. an SEC spokesman. “The funds were going to give us a positive credit rating. more than half of dealers “indicated that hedge funds’ use of financial leverage. centurion structured growth llc. “He admits he has no knowledge that anyone at the funds lied for him. 28. according to transcripts of a court deposition. said his scheme began to collapse early in 2009. “Mr. The timetable for implementing Dodd-Frank rules has slipped for the SEC and other agencies because of the number and complexity of rules tightening financial regulation in the wake of the 2008 financial crisis.000. according to the quarterly survey of senior credit officers at 20 dealers covering the period of September to November. the system placed 6. Rothstein’s claims that the funds or their managers would lie for him are absolutely false and are flatly inconsistent with his unequivocal statement that the funds were not his co-conspirators. and level 3 capital fund agreed not to tell potential new investors he failed to make payments to them.612 were purchased for prices ranging from $76. 2010. and the updated schedule on the website reflects our plans for the remaining rulemaking. Brookes relied on a safety system that was supposed to shut down if Infinium obtained 10 or more fills per second. and not a single one of the dozens of investors in Rothstein’s scheme has said that the funds recommended the investment to them. 3. Those rules moved to an undetermined-date category. the central bank said.” Rothstein was later asked about “false exculpatory e-mails” he had sent to co-conspirators.” especially hedgefund clients.” ray casas. malfunction of an algorithm. according to an updated calendar. the Florida lawyer sentenced to 50 years in prison for running a $1. was testing an algorithm on Feb.” the Fed said. Officials at Platinum Partners value arbitrage.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC.67 to $77.12 Bloomberg Brief | Hedge Funds 7 regulAtory/CompliAnCe derivatives rules delayed in SeC dodd-Frank plan The U.” he said in testimony released Dec. The latest responses “reflect an apparent continuation and intensification of developments already in evidence in the September survey. adoption of morestringent market conventions and deterioration in the strength of counterparties as the reasons. The agency posted a revised schedule on its website today. to hedge funds. Brookes. 01. Brookes was also suspended from trading for 25 business days. CME fined Chicago-based Infinium Capital Management in November a total of $850. including $350. said Dec. “We have already proposed or adopted more than three-quarters of the rulemaking required by the Dodd-Frank Act. of which 4.000 for the Feb. said officials at three Manhattan hedge funds helped him prop up the fraud in its final months. The questioning took place behind closed doors in a Miami courtroom. 29 by e-mail. CME said in a disciplinary notice. “We were going to use as much of the new money coming in to pay them off. —With assistance from Bob Willis in Washington and Anchalee Worrachate in London. had decreased somewhat over the past three months. —Asjylyn Loder ex-lawyer rothstein Says Funds didn’t warn investors scott rothstein. Responses “indicated a broad but moderate tightening of credit terms applicable to important classes of counterparties. a Federal Reserve survey showed.2 billion Ponzi scheme. 3. to a lesser extent. a trader at high-frequency-trading firm infinium capital management.

a fete for Blenheim Palace in the company of its occupants and caretakers. banked the payment as part of a 92-million-pound bonus pool shared between the company’s 18 top executives in the year to March 31. once again at the Breakers. lost plenty of money last year. deSteve Cohen clined to comment. who have won six World Series championships. “Patrick made a number of statements that were exposed as misleading during cross-examination or were refuted under oath by New Star’s witnesses before he truncated the hearing. the founder of Paulson & co. 17.” —Ben Moshinsky 1 2 3 4 5 6 7 8 9 10 11 . At the time of the bankruptcy. the Duke and Duchess of Marlborough. won the bid. The case was settled before New Star could fully refute them in court.8 million pounds.” Henderson Group said in an e-mailed statement. Evershed and New Star “reached an agreement which resolves the employment tribunal proceedings without admission of liability. according to the Los Angeles Times. based in London.12 Bloomberg Brief | Hedge Funds 8 over the hedge ■ steve cohen is bidding for the Los Angeles Dodgers. said the person. but I can’t.3 million pounds.’s Companies House. His party portfolio. according to a person familiar with the effort. the person said. Dad was dancing in front of the stage.. the paper said. received the most pay. Connecticut. and the Whitney Museum of American Art spring gala. Guggenheim Partners Chief Executive Officer Mark Walter said last month than he was joining with Basketball Hall of Fame member Magic Johnson to bid for the team. who was granted anonymity because the sale process is confidential.8 million pounds from 736. The highest-paid partner received 64. Howard Covington. A spokesman for Cohen. denied claims made by a former fund manager that he bullied his staff. Last month. Tellem may end up running the team if Cohen is successful in his bid. the hedge fund founded by alan ■ John duffield. —Amanda Gordon —Jesse Westbrook —Nandini Sukumar ■ John Paulson. his second try this year to buy at least a piece of a Major League Baseball team. but the two parties later walked away from the deal. (Dave Matthews has that job in 2012. 13. paid its founder a 27-million-pound ($42 million) dividend this year. recording the performance on her white mobile phone. he said. the dress code was jeans and cowboy hats for kenny Chesney’s gig at the Everglades Foundation gala. with mom. The average number of Brevan Howard partners for the year ending in March was 52. Bids are due on Jan. according to the filing. Cohen bid this year for a minority stake in the New york Mets. 01. Duffield said in comments on a website. Missouri-based Populous. Sarah Jessica Parker. gala – after kid Rock had performed a new song in tribute to American veterans. founder of new star asset management holdings inc. “Both parties are satisfied with the terms of the agreement. where the music of katy Perry played as they shared the dance floor with Paul McCartney.03. and has hired the architectural firm Populous to look at the possible renovation of Dodger stadium. Among the black-tie benefits he attended were the Foreign Policy Association’s annual Financial Services Dinner. 22 at the U. —Katherine Burton howard.” Evershed said of Duffield’s comments in a telephone interview. Evershed sued New Star for unfair dismissal after being suspended in 2008 by the fund’s chief executive officer. a 79 percent drop from a year earlier after fees plunged. Yan huo.8 million) in cash and stock. citing company accounts. the team’s owner. Sonia Jones. The suspension came shortly after Evershed wrote a letter to New Star’s human resources department complaining about Duffield’s conduct. and have agreed to keep them confidential. which took place in a former bus depot. compared with 267. Cohen. expanded. He’s also met with sports agent Arn Tellem.3 million pounds ($201. is working with Steve Greenberg. the filing said. on the other hand.. ■ capula investment management llP. “I’d love to give a detailed response to some of the points. paid its partners as much as 128.k. New Star was bought by London Stock Exchange-listed henderson group Plc in 2009 for about 107 million pounds ($167. 55. Jenny.. who co-founded Capula in 2005. according to a Brevan Howard filing posted on Dec. on Feb.) As for which 2011 gala musician was his favorite? Jones seemed most enthusiastic when his daughter Caroline played at the inaugural benefit for the Dubin Breast Center.3 million pounds in the year earlier period. seemed happiest at the autumn and spring galas for New york City Ballet. Brevan Howard executives didn’t immediately respond to a request for comment. whose offices are closed for the holidays. 48. Fees fell to 236. which reported the story earlier. who runs the $14 billion sac capital advisors llc in Stamford. The Dodgers. sports bankers said the Dodgers may fetch up to $1 billion. Patrick evershed made “extreme and colorful statements” at an employment tribunal hearing in a dispute that was subsequently settled this month. In Palm Beach. Tellem and Greenberg didn’t return e-mails seeking a comment.3 million) in the year ending in March. david einhorn of greenlight capital inc.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC. Executives of kansas City. Ed Norton and Steve Buscemi. Paulson and his wife. ■ Paul tudor Jones’s parties often featured live music. It didn’t disclose whether Howard. filed for bankruptcy on June 27. Frank McCourt. a managing director at Allen & Co. 2011. agreed to sell. Lady Gaga came out in a luminescent egg-shaped chariot for a long set at the Robin Hood Foundation ■ brevan howard asset management llP.” Duffield said on his website. the Sunday Times reported. couldn’t be reached.

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‘Wow. Upon the announcement. 01. q: What can we expect from 2012. Goodrich was trading at what we believe was fair value. where one party announces a definitive transaction and another competitor in the industry will say. So there’s typically a natural flow of capital out of long-only portfolios and to investors like us. It is interesting to see that this year with many alternative strategies. the correlation between them has been heightened. In addition. When many other investments become correlated. but many don’t have an expertise in following deals to close. spoke to Bloomberg’s kelly Bit about what deals he’s watching and why the outlook remains bright for M&A activity in 2012. when you have strategic buyers in the market. q: What m&a deals are you watching? a: The hostile acquisition by Martin Marietta Materials for Vulcan Materials is an interesting one because it’s a horizontal merger. event-driven strategist. which is consistent with our firm’s long history. Vermont 1 2 3 4 5 6 7 8 9 10 11 .’ We do a tremendous amount of research to judge whether a transaction will close or not. made their businesses more efficient. where deals are announced and the impact on the competitive landscape changes so dramatically that it is a competitive response. We think this helps us to manage volatility as well as to allocate capital. We start from the premise that we are fundamental investors. We believe that understanding what paradigm in which to place a particular deal at any point in its lifecycle helps us find opportunities that may be overlooked and. who manages $360 millionworth of merger arbitrage strategies at New york-based First Eagle Investment Management LLC. With our strategy. and author of “Risk Arbitrage: An Investor’s Guide.” Favorite restaurant: Simon Pearce. In addition. Portfolio manager at First Eagle since 2003. it traded up to reflect the probability of closing. That is why we think we’ll see very robust M&A in the next few years. yet the strategy was able to perform in August and September. Their balance sheets are bloated with cash and they have maintained access to credit. MKM Partners. to begin with. Institutions that were long Goodrich before the transaction was announced earned a one-day premium on their investment. I typically feel that it’ll be up if it’s a risk-on day and it’ll be down if it’s a risk-off day. We have 65 to 70 deals in our portfolio right now. Connecticut College/university/grad School(s): Bucknell University (‘91) professional Background: Merger arbitrage career began at Neuberger Berman in 1993. We see this around the world. 2011 has been a really good example of incredible market dislocation. I think you’re going to see M&A as a tool. and approach both differently. Queechee. with consensus closer to 2 percent. you’re taking $250 million in cost savings out? I want that and if you buy them I can’t. we subcategorize the merger arbitrage universe into investments that tend to be rate-ofreturn focused versus those that are event focused. have taken costs out. q: What’s an example of a trade you might make? a: A good example of a rate of return investment is the acquisition of Goodrich by United Technologies. as well as trying to determine when it might close. to get to that earnings growth. Is it up? If it’s a stock. We believe that the market is pricing this transaction to yield approximately 8 percent annualized. utilizing that cash to buy companies makes a tremendous amount of sense for many companies. With our strategy. there’s this natural uptick in competitive bidding situations. as it always has been. they are largely driven by their own dynamics.12 Bloomberg Brief | Hedge Funds 11 Spotlight First eagle investment management’s Jason dahl on profiting From m&A Jason Dahl. the success or failure of a particular deal is based on its own merits. in assuming the particular risks that arise from a merger process. Without the ability to take costs out to grow earnings. Family: Married with four kids. q: how is your strategy different from other merger arb funds? a: We are geographically and market cap agnostic. we attempt to isolate our investors from this type of volatility. In general. given what we went through with Lehman and the financial crisis. it’s two like businesses that could potentially be put together to get $250 million of costs savings out per year. m&a wise? a: Many corporations globally. even more importantly. GDP growth estimates for 2012 range from 1 percent to nearly 4 percent. mentor: Keith Moore. I can wake up and see where Asia is going. We see this phenomenon as well with deals like PharMerica and Omnicare.This document is being provided for the exclusive use of JEAN-MARC MELCHIOR at EOS MANAGEMENT INC. When you have cash in your balance sheet it is a drag with negative real returns. to identify risks that might be underpriced and that we want to avoid. Hertz and Dollar Thrifty would be a similar story. q: What drove returns in a volatile year? a: We have invested this year as we do every year. That is below what most of corporate America is hoping for and wanting to show on their top and bottom line. Charitable work: Juvenile Diabetes Research Foundation. and that ultimately fundamentals will drive the probability of deal closure. The idea of putting together two like companies and being able to run forward with EBITDA that jumps by 20 or 30 percent is pretty powerful. where the proposed merger is designed to take costs out. cut staff. hometown: wilton. The day before the definitive deal was announced.03. and how Europe looks to open.’ That’s the optimal situation. if the deal closes at the end of June as we project. we are basically buying something and taking on a risk – what we call ‘deal risk. we’re pleased when our investments are not.