July 11, 2008 by FINalternatives


									FIN        t
  Friday, July 11, 2008

Florida Firm Preps Asset-Based
                                                             HEDGE                       FUND
                                                                                                                &      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

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    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

                                                  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
                Publisher                              year after freezing redemptions   money and that so many people who
              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,
                                                  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
        jshazar@finalternatives.com               Deutsche Bank made a $90 mil-          he was forced to put the redemp-
                                                  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
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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

    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
  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

    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.
    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
  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
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
years.                                                                          will be closed to new investments
                                                                                until it is fully integrated in its new
                                         H.F. Research Firm
Family Office
                                         Adds Ex-Basis
Advisory Firm                                                                   Madrid Hedge Fund
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
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
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