"July 11, 2008"
FIN t alternatives Friday, July 11, 2008 Florida Firm Preps Asset-Based HEDGE FUND www.finalternatives.com & PRIVATE EQUITY NEWS Vol. IV, No. 26 Inside this Issue Lending Hedge Fund News ........................................... 2, 5 Hedge Fund Launches Shrink In A dvantage Capital Equity Solutions, a Jacksonville, Fla.-based asset-based lender, has forming assets: loans or properties purchased from small and regional banks and sold for less than face Number, Grow In Size Devaney Fund Finally Sinks Second Quarter Rally Fails In June launched a private equity fund and value. Parsons said the hedge fund Sellers, Clarium Soar Real Estate Fund Comes Undone is prepping a hedge fund for launch has a $100 million target. Both Fund Launches .............................. 3 at the end of this month. funds will initially focus on resi- Bay Hill Offers Volatility Fund Advantage Capital’s p.e. dential real estate in California and New Special Situations, Futures offering, Advantage Capital Equity Florida. Funds 'Rock' Fund I, launched in May and invests “We see a bottoming of the real Halls of Justice ........................... 6-7 Brian Hunter Speaks in “deep equity” loans, because of estate market six to 18 months out Hedge Fund Manager Gets 12 Years their real estate collateral and low but that doesn’t really affect us,” In Ohio Fraud Case loan-to-value ratios, according to said Parsons. “I live in Florida and More Trouble For AbCap, Homm Bob Parsons, senior vice presi- we’re starting to see some stabili- Searches & Mandates ................... 8 dent. The firm aims to raise $74 zation in pricing in Jacksonville.” San Diego, Holyoke, Mass., Seek Private Equity Managers million for the fund, its first private Parsons is currently canvassing L.A. Pistol & Hose Nears FoF Shortlist equity vehicle. the market for seed investors for Regulation ...................................... 9 The firm’s maiden hedge fund, the p.e. fund and is optimistic AIMA Readying Fund Of Hedge Funds Advantage Capital Equity Fund about investors’ appetites for ABL Best-Practices Standards People Moves............................... 10 II, will target discounted nonper- strategies. Connective Capital Launches Offshore Hedge Funds P alo Alto, Calif.-based Connec- tive Capital is ramping up its investor base with a trio of offshore over $100 million in assets. The onshore version has had annualized returns of 18% since inception and bio-fuels spaces. Romero said he is currently bullish on IP video where “you can now watch Netflix movies funds for its market-neutral, alter- is up 4.7% year to date, according online without waiting for your native long/short, and short-bias to Robert Romero, founder. movies or going to Blockbuster.” strategies. Next month, Connective will In terms of alternative energy, The firm this month launched the launch the Emerging Energy Fund. Romero said there is global Connective Capital I Master Fund, Its $10 million onshore version demand for wind and solar power a global market-neutral long/short launched in October and was up and bio-fuel. equity fund, to invest in technology- 57% last year and is up 12.8% year “Alternative energy right now related names. The firm’s existing to date. The fund’s portfolio is is only 1% of the world electricity long/short strategy, which began made up of alternative energy tech generation so we certainly see that trading four years ago, manages companies in the wind, solar and Continued on page 9 Copyright 2008 by Stone Street Media LLC. All rights reserved. Photocopy permission is available solely through Stone Street Media LLC, 262 Mott Street, Suite 102A, New York, NY 10012. Copy, pho- tocopying or duplicating this publication in any form other than as permitted by agreement with Stone Street Media LLC is prohibited and may constitute copyright infringement subject to liability of up to $100,000 per infringement. For photocopy permission, back issues and bulk distribution needs, please contact us at +1 (212) 966-0047 or e-mail firstname.lastname@example.org New Hedge Funds Are Fewer, Larger T here are fewer new hedge funds this year, but they are bigger, according to a new survey. Goldman Sachs accounted for more than 40% of alone the capital raised in its newest Chicago-based Highliner Invest- ment Group’s Alyeska Fund was fourth at $1.5 billion. According to Absolute Return funds. GS Investment Partners, Most of the new funds pursue magazine, 35 funds began trading run by former proprietary trading an equity long/short strategy, with during the first six months of the desk chief Raanan Agus, manages a fair number of mortgage-backed year with a total of $19.5 billion. $7 billion—more than three times securities and distressed funds also The number of new funds fell by as much as the second-biggest launching. more than 50% from 72 during the launch of the year—while its new Rounding out the top 10 fund same period last year, but those 35 vehicle aimed at capitalizing on the launches of the first half are SIR funds raised 40% more money at credit crisis, the Mortgage Credit Capital Management’s Hedge launch than did last year’s 72. Opportunities Fund, manages $1.1 Equity Master Fund at $700 mil- Mirroring the hedge fund billion. lion, Bellman Walter Capital’s industry as a whole, the biggest The second-biggest launch of the Global Fund at $650 million, and hedge fund launches are getting first half was Greenwich, Conn.- KnightHead Capital Manage- bigger: The top five funds making based Conatus Capital Manage- ment’s Master Fund, Obrem Cap- their debut in the first half raised ment’s Conatus Capital Partners at ital Management’s Obrem Capital $13.7 billion, 70% of the $19.5 bil- $2.3 billion, followed by Lone Pine and One William Street Capital’s lion total. Each raised at least $1 Capital’s emerging markets Lone Master Fund with $500 million billion. Dragon Pine fund at $1.8 billion. each. FINalternatives Devaney Shutters Hedge Fund After Deirdre Brennan Missed Margin Call A Publisher year after freezing redemptions money and that so many people who email@example.com 212.966.0047 amid highly-publicized losses saw the skills I have and trusted in in his hedge fund, John Devaney us have now been hurt.” Hung Tran has thrown in the towel. Devaney said he has not received Managing Editor Devaney Wednesday shuttered management fees since September, firstname.lastname@example.org 212.966.0116 his Horizon Strategy and told his and has personally lost more than investors there was no money left, $150 million in his credit crunch- Jonathan Shazar The New York Times reports. The victimized fund. He said he did not Senior Reporter final act began two weeks ago when shutter the fund last June—when email@example.com Deutsche Bank made a $90 mil- he was forced to put the redemp- 212.966.0051 lion margin call. When Devaney’s tion freeze in place—because he United Capital Markets Asset wanted to try to turn things around Stone Street Media, LLC 262 Mott Street, Suite 102A Management couldn’t repay, for investors. Instead, they will be New York, New York 10012 the bank seized the hedge fund’s left with nothing. www.finalternatives.com remaining assets. In September, “Other guys who are only another bank demanded Devaney looking at dollars and cents would FINalternatives is a general circulation weekly. No statement in this issue is to be repay a loan, and then seized 40% have shut the fund down,” he told construed as a recommendation to buy or sell securities or to provide investment of the equity in the fund. the Times. “I have battled it out to advice. Copyright 2008 by Stone Street “I’m devastated, I’m totally dev- try to save all my investors.” Media, LLC. Copying prohibited without the permission of the publisher. astated,” Devaney told the Times. “I Devaney added that he plans to feel horrible that I’ve lost my own rebuild his business. 2 FINalternatives July 11, 2008 FUND LAUNCHES Eddington Mass. Hedge Fund Launches Launches Equity Volatility Strategy Fund of Funds U .K.-based Eddington Capital Management in May launched D uxbury, Mass.-based Bay Hill Capital Management has launched a volatility multi-strategy a diversified portfolio, trading mainly in listed equity options. The $25 million Cayman master- the Eddington Equity Opportuni- fund. feeder fund was launched after the ties Fund, an equity-related fund of The specialized hedge fund, firm ran the strategy in managed funds. which launched on July 1, will accounts for a year. The fund focuses on equity- pursue three volatility sub-strate- The fund charges a management related strategies and typically gies: arbitrage, dispersion, and fee of 2% and a performance fee of invests in between eight and 12 relative value, and will maintain 20%. managers across a number of asset classes, including cash equities; exchange-traded funds; single stock derivatives; equity index Gibraltar Firm Offers Special derivatives and equity-linked instruments. Situations, Futures Funds Equity Opportunities incor- porates a mix of long- and short- biased exposures and is diversified across region and market cap and N ewly-formed hedge fund shop Quay Financials has launched a global special situations the new entity. Quay’s CONAG Managed Fund launched on July 1 and is a long employs no additional leverage fund and a managed futures fund, volatility strategy. The fund invests beyond that used by the underlying and is prepping multi-strategy and in securities and derivatives across managers. global futures offerings. equity, currencies, commodities, The fund returned 2.74% in The Gibraltar-based firm was set futures, options, contracts for dif- its first month of trading. Its best up last month via a management ference and exchange-traded funds, performers included a directional buyout following a consolidation employing long and short strategies index futures strategy, which prof- of Van der Moolen Group’s Euro- as well as spread trading, options ited from long exposure during pean businesses at the end of last trading and arbitrage and relative the market upswings in the second year. The firm currently has two value strategies. and fourth weeks of the month, divisions: broking and investment The Global Special Situations and a commodity-focused equity management. It has also estab- Fund, which launched on the same fund, which recovered sharply lished the Quay Umbrella Fund day, focuses on merger arbitrage, from losses in March and April, PCC, created under the protected corporate restructuring and event- according to the firm. cell company structure, to launch driven investments. “The only significant loser was additional funds. Quay is also launching another our Asian manager, who suffered “We think it is quite an inter- pair of funds later this year, the from both stock-specific issues esting structure and we don’t think Global Strategy and the Systematic and also the general malaise sur- there are too many firms out there Global Futures funds. rounding Greater China markets at the moment that can set up funds Funds under the Quay Umbrella in the wake of the Sichuan earth- relatively quickly and cost effec- Fund charge 2% management and quake, inflation concerns and more tively enabling the managers to 20% performance fees, except general worries about over-valua- have a regulated fund—albeit off- the Managed Futures fund, which tion,” it said. shore,” said a source familiar with charges 25% for performance. July 11, 2008 FINalternatives 3 Commitment to our clients Shoreline Trading Group, founded in 1996, is a leading provider of Prime Brokerage and Agency Execution. We are proud to offer the custody, execution, clearing and reporting services of Goldman Sachs Execution & Clearing, JP Morgan, Credit Suisse Securities and Fortis Securities. Members of BATS, DirectEdge, FINRA, ISE, MSRB, NASDAQ, NFA, NSX, NYSE Arca & SIPC. Shoreline TRADING GROUP Shoreline Trading Group, LLC New York - Los Angeles - Santa Monica Sellers Capital Hedge Fund Rally Ends In June Up 65% On Oil, Gas Bet H edge funds took a step back to end the second quarter, with three major indices showing losses wiping out its year-to-date returns and leaving it down 0.01% in the first half. Distressed securities and S ellers Capital’s $230 million flagship hedge fund is up an eye-popping 65.3% in the first half in June. Greenwich Alternative Invest- merger arbitrage also posted losses, dropping 1.36% (down 5.11% ments’ Greenwich Global Hedge YTD) and 1.03% (up 0.4% YTD), on a natural gas and oil bet. Fund Index dropped 0.42% in June respectively. The Chicago-based firm netted a to return to the red year-to-date, Greenwich said that long/short 27.3% return in the second quarter down 0.1%, while Hedge Fund equity funds lost 1.3% (down on the strength of its investment in Research’s HFRI Fund Weighted 2.08% YTD), especially value Contango Oil and Gas, a Houston- Composite Index declined 0.68% funds, which fell 2.34% (down based independent natural gas and (down 0.75% YTD). But experts 3.3% YTD). Emerging markets oil company. insist that the news is not all bad. funds also continued their down- “The second quarter of 2008 “The downside protection ward spiral, falling 3.62% (down was one of our best quarters ever that characterizes hedge funds is 7.28% YTD). and our third straight good quarter, clearly evident this year with long- Likewise, HFRI’s biggest losers though the market has declined only equity indices experiencing were emerging markets funds. approximately 15% in the mean- losses of 10% or more,” Margaret Last year’s high-flyers continued time,” wrote Mark Sellers in a Gilbert of Greenwich AI noted. their sharp decline on the year, monthly update to investors. “Once Indeed, the Standard & Poor’s 500 falling 3.42% overall (down 6.74% again, our best-performing stock suffered an 8.48% drop last month, YTD), with Asia ex-Japan funds was Contango Oil and Gas, up 43% and is down 12.19% on the year. remaining the year’s worst after for the quarter.” Dow Jones said that event- shedding a further 5.57% (down Sellers added that he expects driven funds fell by 2.8% in June, 14.16% YTD). Contango to move toward a partial or outright sale later this year based on its better-than-expected increase in reserves and its announcement Clarium On Pace For Triple-Digit last month that it was meeting with prospective buyers. Returns The firm’s long positions other than Contango did not fare well last quarter, but its hedges and C larium Capital is shaping up to be this year’s Paulson & Co. The $6.4 billion San Francisco and 11.2%, respectively. The only black mark on its first-half record was a 9.9% drop in March. single short position in MBIA did so well that they essentially offset hedge fund is up almost 58% in the Last year, New York-based them, said Sellers. first half, it told investors. The firm Paulson made headlines posting MBIA, an Armonk, N.Y.- returned 16% last month, with 8.9% triple-digit gains by betting against based financials services concern of the return coming on U.S. equity mortgage-backed securities. Like focusing on municipal bonds and investments and the remaining Paulson last year, Clarium has asset-backed securities, has been 5.6% coming from foreign stocks. enjoyed a corresponding jump in battered by the credit crisis, making Clarium, which was set up by assets under management, as new it a very profitable short in recent PayPal co-founder Peter Thiel, money chases performance. The months. follows a global macro strategy. firm’s assets under management “The MBIA fell 64% during the The firm’s strong June follows rose almost 70% in the second quarter and we’re still short the similarly impressive months in Jan- quarter, up from $3.8 billion at the stock.” uary and May, when it rose 24.4% end of March. July 11, 2008 FINalternatives 5 HALLS OF JUSTICE Amaranth’s Hunter Unbowed Accountant Not Liable In Hedge A lmost two years after his nat- ural gas trades cost Amaranth Advisors’ clients more than $6 bil- mony before it. Hunter says FERC Chairman Joseph Kelliher’s story that he “was in the middle of an Fund Collapse lion and sent the hedge fund into a death spiral, Brian Hunter is interview and there was a lunch break, and he never came back” A uditors are not liable for negli- gence where hedge fund man- agers exercise “nearly unfettered speaking out on the ordeal. The is a complete fabrication. Hunter man vilified by investors, regu- claims the interview never hap- control” over a fund’s (fraudulent) lators and the press as all that is pened, because his lawyer refused activities, a New York judge has wrong with hedge funds doesn’t to allow him to testify on video, ruled. think he did much wrong, and is though Hunter says he would have New York Supreme Court Jus- shocked by the venom directed at done so. tice Charles Ramos granted a him because of it. He’s equally angry towards the summary judgment motion to “I must be a bad guy,” Hunter Commodity Futures Trading Ernst & Young, which was sued tells Fortune magazine, which Commission, which he says gave by the liquidators of a collapsed tracked him down at his Calgary, the impression that its civil charges hedge fund E&Y audited. Ramos Alberta office. A young, very rich against him were actually criminal. ruled that liquidators cannot bring hedge fund trader? “You couldn’t And he is incredulous that the two claims against an auditor where the ask for a more toxic mix” in the federal agencies seeking his scalp wrongdoing in a case “is imput- public’s eye, he says. are playing by two different sets able” to the fund itself. Hunter declined to go into too of rules: The CFTC has alleged The fund in question is Beacon much detail, given the various attempted market manipulation, Hill Asset Management, which lawsuits and regulatory actions while FERC charges actual market collapsed in 2002. The Securi- involving himself and Amaranth. manipulation, because the two ties and Exchange Commission But he is “not particularly cha- define it differently. alleged the fund’s investment man- grined” about his role in the death “It’s like driving 60 miles per agers committed securities fraud of the once $9 billion Greenwich, hour when the speed limit is 65 leading to more than $300 million Conn.-based firm, according to miles per hour,” Hunter com- in losses, charges eventually set- Fortune. plained to Fortune. “A different tled. The liquidators of the Beacon Hunter has thus far avoided the highway patrol stops you and says, Hill Master fund also accused the questions of reporters and will not ‘Our rule is 45 miles per hour.’ So fund’s managers of inflating the allow his picture to be taken—For- you get a ticket.” value of the mortgage-backed secu- tune describes him “quite cute in a Despite losing so much so pub- rities it owned, and also claimed conventional way” with blue eyes, licly, Hunter had raised $1 billion that E&Y had failed to detect the curly dirty-blond hair and a crooked for a new fund, Solengo Capital wrongdoing in the first quarter of front tooth—but he is distressed Advisors, just months after Ama- 2002 due to a deficient audit. about his portrayal in the media, ranth’s collapse. But investors who The “fundamental principle of and especially with his treatment were OK with his losing $6.6 bil- agency that the wrongdoing of by the regulators who have him in lion in one fell swoop balked at corporate management committed their sights. investing with a guy charged with within the scope of their employ- He lashed out at the Federal market manipulation. ment will generally be imputed to Energy Regulatory Commission, “Lost money is a black mark, the corporation,” Ramos ruled. which has sued him for market but just the allegation that you did The liquidators’ attorney rejected manipulation, and gave his side something illegal is a non-starter,” Ramos’ reasoning and said he has of the infamous story of his testi- he said. filed notice of appeal. 6 FINalternatives July 11, 2008 HALLS OF JUSTICE Fund Of Funds Sues AbCap, Ex-Hedge Fund Homm Manager Lay Gets 12 Years T roubled hedge fund group Abso- lute Capital Management keeps finding more of it. and forcing the firm to suspend withdrawals and seek a restruc- turing of the funds. M ark Lay, the Pittsburgh hedge fund manager convicted of A U.S. fund of hedge funds has “Homm’s transactions generated fraud in a scandal that cost an Ohio sued AbCap and its co-founder, huge profits for” Hunter World workers’ compensation fund $216 accusing the latter of defrauding Markets, the brokerage, “in a million, has been sentenced to a investors and the former of letting variety of ways, which in turn gen- dozen years in prison. it happen. erated secret profits for Homm,” the After a marathon 10-hour, two- Evergreen, Colo.-based White White Peaks lawsuit alleges. White day sentencing hearing—U.S. Peaks Asset Management sued Peaks’ Cascade Fund had invested District Judge David Dowd com- the firm and Florian Homm, about $1.5 million in AbCap. plained it was the longest he had whose abrupt departure last year In addition, Homm “used ever been a part of—Lay was sent sent AbCap into a downward investor money to prop up a penny straight to prison. In addition to the spiral, in Denver federal court stock in which he was beneficially jailtime, Dowd ordered the founder last week. According to the suit, a large personal shareholder.” of MDL Capital Management to Homm “secretly steered” investor The lawsuit is not the first for pay back all $216 million he was funds into pink sheets through a either party. Another Coloradan, oil accused of losing in highly-levered brokerage firm he owned half of. millionaire Jack Grynberg, sued hedge funds he invested in without After his departure from AbCap Homm earlier this year, although authorization. in September, investors learned the suit was dismissed. Three years Lay, whose attorney said he that he had invested about $500 ago, White Peaks successfully sued would appeal, arguing that the jury, million in illiquid penny stocks, a Tennessee firm, alleging it reck- and not the judge, should have leading many to seek redemptions lessly bet against Google shares. determined the total loss to the Ohio Bureau of Workers’ Com- pensation, continues to maintain that the losses came in spite of an Former Morgan Stanley Rep. honest effort to turn a profit for the BWC. Admits Stealing Prime Broker Info Lay is just one of 19 people con- victed in the BWC scandal, which A former Morgan Stanley client service representative pleaded guilty this week to possessing a Island, N.Y., home. Another former Morgan Stanley employee, Ira Chilowitz, pleaded guilty last year included a bizarre theft from a $50 million rare-coin fund by a top state Republican fundraiser. The stolen list of the firm’s prime bro- to stealing the data, which he said scandal is also credited with huge kerage clients, among other propri- he and Peteka planned to use to losses for Republicans in Ohio in etary information. generate business for a consulting the 2006 election, including the In addition to the list of hedge firm. losses of the governor’s office and fund clients, Ronald Peteka “I made a very huge mistake,” a U.S. Senate seat. Former Gov. admitted he received via e-mail Peteka said at the hearing at Man- Bob Taft was convicted of four formulas used to calculate rates hattan federal court. He faces as misdemeanor ethics violations, in paid by those clients, sending the much as 10 years in prison and a part in connection with the BWC stolen information to his Long $250,000 fine. scandal. July 11, 2008 FINalternatives 7 SEARCHES & MANDATES San Diego To Boost Private Equity L.A. Pistol & Hose Short Lists T he $5 billion San Diego City Employees’ Retirement System is implementing a new 5% from a variety of gatekeepers, including funds of funds and tradi- tional separate account consultants. FoHFs Finalists target allocation to private equity, and is seeking proposals from dis- The system anticipates commit- ting approximately $100 million to T he $15.3 billion Los Angeles Fire and Police Pension is get- ting closer to naming finalists for cretionary private equity advisors $150 million per year for the new to help initiate and develop a diver- mandate. its $300 million fund of hedge sified, global, broad-market private The deadline for the request for funds search. equity portfolio. proposals, which can be found on The pension’s board heard pre- SDCERS is accepting proposals the system’s Web site, is Aug. 1. sentations from Common Sense, Crestline Investors, Dorchester Capital Advisors, Entrust Cap- ital, FrontPoint Partners, GAM, Ohio Increases Alts. Portfolio Lazard and Permal. Following its May meeting, the LAFPP board decided to conduct T he School Employees Retire- ment System of Ohio last month committed a total of $165 million to date. AG Super Fund and the Brevan Howard Fund are both slated to receive up to $50 million a search for an emerging manager fund of hedge funds shop as an addition to its current alternative to private equity and hedge funds. each. investment allocation. The pen- The plan committed up to $40 Ohio in April also made com- sion plan is looking for firms with million to Odyssey Investment mits of $50 million each to hedge five years experience in managing Partners Fund IV and up to $25 funds the Renaissance Institutional hedge funds and a minimum of $30 million to Evergreen Pacific Part- Equities Fund and Linden Interna- million in institutional assets. ners II. Ohio’s board also approved tional. Investments director Robert investments in two hedge funds at Cowman said up to $500 million its June meeting, bringing to 27 the will be invested in approved hedge number of hedge funds approved funds by the end of the year. Holyoke Fishing For P.E. Managers Japan Plan’s Hedge Portfolio Soars A Japanese pension fund has increased its hedge fund invest- to boost that to 4% of its ¥13 tril- lion (US$121.1 billion) in assets, T he $250 million Holyoke (Mass.) Retirement Board is looking for opportunities within the ments sixfold in the past year, and or ¥520 billion (US$4.8 billion). private equity space and has issued plans to increase them further. The pension has also hired a a request for information. Japan’s Pension Fund Asso- pair of professionals to oversee The minimum criteria for p.e. ciation began investing in hedge its hedge fund and private equity managers interested in the job funds in the second half of last investments. It has about ¥60 bil- include at least five years experi- year, a year after it first began to lion (US$559.8 million) invested in ence and one or more mandates consider the asset class. The fund p.e., with plans to boost that to 2% exceeding $200 million. now has some ¥300 billion (US$2.8 of assets, or ¥260 billion (US$1.1 A copy of the RFI is available on billion) in hedge funds, and plans billion). Segal Advisors’ Web site. 8 FINalternatives July 11, 2008 REGULATION Real Estate Hedge Fund Considers Winding Down Lobby Group Plans FoF Best- A fter dropping by almost half in the past year, listed hedge fund Rock Real Estate Securities Fund “We are talking to investors and will discuss it at the quarterly board meeting,” fund manager Mark Practices Guide may be on its way out of business. The Irish Stock Exchange- listed offering, managed by the Laurence told Property Week. “There is the possibility of inves- tors rolling over into a long-only T he Alternative Investment Management Association is set to add to the bevy of best-prac- Rock Capital Group, is in talks vehicle, which we think is a more tices standards for the hedge fund with investors about the fund’s appropriate way to invest in prop- industry. future. erty shares in the current market.” The London-based industry group is readying the first set of standards for funds of hedge funds. Hedge Funds Increase Cash, AIMA says the guide, set for pub- lication next year, will be “a prac- Reduce Leverage In Tough Times tical business tool for fund of hedge funds managers and will also seek H edge fund managers around the ning of 2008. to provide relevant and insightful world responded to last year’s Cash levels were slightly higher information for the investor, regu- difficult market conditions by low- among hedge funds in Asia (17%) latory and political communities, ering their leverage and moving and Europe (16%). Equity-oriented and the hedge fund industry’s ser- assets into cash. funds had 14% of their assets in vice providers.” According to a new study by cash, and fixed income-focused “There are currently no dedicated Greenwich Associates and Global funds had 17%. Among the world’s guidelines for fund of hedge funds Custodian, the proportion of hedge biggest hedge funds, nearly 12% of managers yet the majority of new fund managers earning double- assets were invested in cash. institutional investors tend to favor digit investment returns dropped Meanwhile, hedge fund industry this investment route, rather than dramatically from 2006 to 2007, leverage ratios declined to about investing directly in hedge funds,” with the biggest falloff occurring 2.1 at the end of 2007 from 2.3 AIMA CEO Andrew Baker said. among funds focused on fixed a year earlier, according to the Like the British Hedge Fund income. With industry-wide per- study. Overall gross leverage ratios Working Group’s voluntary best- formance on the decline, the hedge for fixed income-oriented funds practices code for hedge funds funds participating in this year’s declined to an average of approxi- unveiled earlier this year, this new study reported holding fully 15% mately 3.0 at the end of 2007 from set of standards is being drawn up of their assets in cash at the begin- 3.4 last year. by a group of industry luminaries, including representatives from Allianz Alternative Asset Man- CONNECTIVE cont. from page 1 agement, Fauchier Partners, Financial Risk Management and transforming itself quite a bit,” he September. Man Investments. said. Prior to founding Connective, Despite their backing by some Connective also plans an off- Romero served as vice president of of the world’s largest hedge funds, shore version of its $20 million marketing and business develop- the HFWG standards have had dif- short biased fund, which launched ment for eVoice, a national voice- ficulty recruiting new adherents, in January. The offshore fund mail provider, which was acquired with just one signing up since their should be available sometime in by America Online in 2001. January release. July 11, 2008 FINalternatives 9 PEOPLE MOVES GLG Names Coffey joint venture of Citigroup Global Bernie joins following seven Wealth Management and the years as a director of Australia’s Successors Pacific Alternative Asset Man- collapsed Basis Capital, where he agement Co. specializing in the was head of distribution. G reg Coffey is leaving big shoes to fill at GLG Partners. So big, in fact, that they will be filled development of customized hedge fund portfolios. by three people. Ex-Robeco Merger The London hedge fund con- CFTC Enforcer To Arb. Team Finds tinued its recent hiring spree with the addition of two Morgan Retire New Home In N.Y. Stanley veterans to take over three of Coffey’s funds when he leaves in October. Among the funds that T he head of enforcement at the Commodity Futures Trading T he merger arbitrage team from Robeco Investment Man- agement has found a new home Bart Turtelboom and Karim Commission is leaving the regu- Abdel-Motaal will jointly run is within AM Investment Partners, lator to return to private practice. Coffey’s—and the firm’s—largest, a New York-based alternative asset Gregory Mocek, who has served with US$4.6 billion in assets. Tur- manager. as director of enforcement since tleboom and Abdel-Motaal co-ran The former Robeco team, headed 2002 and under whose tenure the Morgan Stanley’s fixed-income by industry vet Arthur Levy, will CFTC began its probe into trading emerging markets team. merge with AMIP, bringing with at collapsed hedge fund Amaranth Earlier this week, GLG them approximately $100 mil- Advisors, will step down within 60 announced its hire of Driss Ben- lion under management. AMIP’s days. Brahim from Goldman Sachs new Merger Arbitrage Fund will He is to be succeeded on an to take over a fourth Coffey fund. be managed independently from interim basis by Stephen Obie, the Ben-Brahim has run Goldman’s its existing Convertible Arbitrage CFTC’s regional counsel in New emerging markets trading for two and Volatility Arbitrage funds, and York. years. will be closed to new investments until it is fully integrated in its new home. H.F. Research Firm Family Office Adds Ex-Basis Advisory Firm Madrid Hedge Fund Director Adds MD Adds EM Manager S helterwood Financial Ser- vices, a New York-based multi- H edge fund research and advi- sory boutique Hatfield Liptak Advisors has tapped Rick Bernie P róxima Alfa Investments has recruited Igor Ojereliev family office advisory firm, has to help expand its distribution net- from Deutsche Bank to launch its hired Tara Duffy as a managing work. Bernie will work alongside Global Emerging Markets Fund director focusing on serving and group co-founders Damien Hat- later this year. advising Shelterwood’s client field and Daniel Liptak to search, At Deutsche Bank, Ojereliev families. select, research and market hedge was part of the principal strategies Previously, Duffy served as a fund managers to institutional group. Previously he was a man- director and portfolio manager investors, family offices, high net- ager for RAB Capital’s Emerging at Global Hedge Strategies, a worth investors globally. Markets Debt Fund. 10 FINalternatives July 11, 2008 NORTH AMERICAN HEDGE FUND LEAGUE TABLES By Ankur Samtaney, Eurekahedge Analyst T he Eurekahedge North American Hedge Fund Index was flat in June, in the face of wide swings across key asset classes—the Standard & Poor’s 500 plunged tainties about the financial sector (as some large finan- cial companies reported further write-downs), were among the factors respon- 8.6% on the month, while energy prices rallied strongly, sible for the notable sell-off with crude oil breaching the US$140 per barrel mark. across equities. Although The sharp run up in commodity prices largely ben- the sell-off afforded long/ efited CTAs, who recorded impressive gains during short managers with decent the month. Additionally, further weakening in the U.S. opportunities on the short dollar also translated into some gains for the strategy, side (in the industrial, consumer discretionary and real over June. estate sectors), not all managers were positioned in pre- The surge in commodity prices, heightened concerns paredness for the same. This is clearly reflected in the over worrisome levels of inflation, and renewed uncer- strategy’s regional index. AuM June ‘08 2008 2007 % rise in Annualized Name of the Fund Rank2 (US$ Mln) return YTD return NAV return Eurekahedge North American Hedge Fund Index1 0.07 1.66 10.29 153.74 11.58 Long/Short Equity Eurekahedge North America Long/Short Equities Hedge Fund Index -1.07 -1.17 11.47 148.63 11.31 OCM Energy Total Return Fund 1 16 13.89 87.41 -24.19 43.47 22.91 Hyerdale Capital LP 2 1 19.50 52.34 -8.03 40.11 36.52 Sprott Hedge Fund LP 3 721 7.78 27.60 14.01 634.91 29.71 Rosen Institutional LP 4 43 2.13 24.88 N/A 24.88 55.95 Aletheia Insider Index LP 5 197 4.71 20.75 6.13 112.01 9.85 Manalapan Oracle Eagle Fund LP 6 60 4.79 17.89 26.28 358.27 23.67 Jasper Partners LP 7 5 -1.95 16.99 15.07 243.30 14.54 Pascal Absolute LP 8 3 -1.98 14.17 22.98 147.47 18.84 Tetra Offshore Fund Ltd 9 12 3.40 14.14 8.91 114.82 17.14 Oak Group Guardian I LLC 10 7 17.99 12.78 19.45 155.94 8.65 CTA/Managed Futures Eurekahedge North America CTA/Managed Futures Hedge Fund Index 3.00 15.04 10.33 194.67 13.56 RAM Fund LLC 1 1 13.00 54.19 56.88 262.01 13.15 Excelsior Aggressive Fund LP 2 20 2.97 38.08 27.84 645.06 16.48 Legacy Futures Fund LP 3 16 -5.06 36.53 19.15 844.99 13.63 Quickpool LP 4 147 6.85 35.36 5.19 1,849.53 25.84 Tactical Institutional Futures Program 5 32 6.84 32.97 6.84 1,543.83 20.15 Tactical Multistrategy Commodity Fund LP 6 38 5.06 24.86 11.19 272.57 18.72 Excelsior Fund LP 7 7 1.49 21.70 22.66 3,015.23 18.93 H T Funds CTA 8 * 4.60 20.26 18.56 42.59 47.26 Sunrise Commodities Select Portfolio LP 9 239 2.60 17.77 7.15 7,130.44 18.41 MLM Index Fund - Leverage B 10 16 3.51 16.63 -4.61 3.76 0.39 1 2 * not disclosed based on 37.79% of the funds reporting their June 2008 returns as at July 10, 2008 ranked by 2008 YTD returns July 11, 2008 FINalternatives 11 The deﬁnitive source on global private equity Sign up now at www.eurekahedge.com/register.asp with promotion code GEN-FINAlt. 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