Tomorrow's Titans 2021

2021 Tomorrow’s Titans TOMORROW’S TITANS 2021 Introduction Fifty Rising Stars HAMLIN LOVELL his is the sixth edition of handful of managers were seeded by family our Tomorrow’s Titans “Increased appetite offices, which are not usually disclosed. report; previous reports were published in 2010, on the part of Investment structures are most likely to be 2012, 2014, 2016 and Cayman, Luxembourg or Ireland private funds 2019. The format has been managers to give or managed accounts, but a few have launched expanded from previous with a UCITS fund as their first vehicle: such as editions, which published interviews reflects a Venkat Pasupuleti of Dalton and Markus Schanta fifty short profiles. This generally optimistic of BlueBalance. Tyear, thirty-six managers have short profiles, and fourteen have extended profiles written off the mood around hedge There is a wide range of assets under back of interviews. management: some managers have raised more fund performance than $500 million or $1 billion – in some cases Increased appetite on the part of managers to give from day one – while others might have started interviews reflects a generally optimistic mood and asset raising.” with as little as $20 million, using a third-party around hedge fund performance and asset raising, management company and outsourced service notwithstanding some anxiety around Brexit providers. Many have offered, or are still offering, and European fundraising for some UK-based discounted fees in founders’ or early bird share managers. classes. A few managers started off working with a regulatory hosting platform of some kind, before The report highlights portfolio managers who are building out their own full scope management already leading managers in distinctive strategies Most of the managers – 45/50 – have launched company. – or close to becoming leading managers – with their own management company, and most promising performance, the potential to grow of those have done so in the past four years. Strategies represented include seventeen equity assets, and in some cases with scope to further Notwithstanding the Covid pandemic, eighteen long/short; one equity market neutral; eleven develop their strategies as they grow. launched in 2020, and two in 2021, as the industry credit; three activists; three event-driven; two has swiftly adapted to remote working. A few fixed income relative value; two discretionary Nominations come from our extended network managers are about a decade old but took more macro; one systematic macro; one relative value of readers, subscribers and contacts, including: time to develop a higher public profile. equity arbitrage; five CTAs or multi-strategy pension funds; family offices; endowments; A handful of them have launched funds with quantitative; two commodity and one index and foundations; funds of funds; private banks and existing well-established firms, such as CIFC event arbitrageur. wealth managers; insurance companies; prime Asset Management; Serone Asset Management; brokers; administrators; custodians; depositaries; Rockefeller Capital Management; Dalton Irrespective of whether managers are discretionary law firms; accountancy firms; exchanges; Investments and Ambienta SGR. In some cases, or quantitative, many are keen to emphasize their technology providers, and others. these firms have also provided seed capital. factor awareness – and sometimes their factor neutrality – especially after the violent factor The geographic breakdown, with twenty-six Assets, structures and strategies rotation seen in 2020. managers in the Americas, nineteen in Europe, Day one capital, as well as strategic and and five in Asia, is near to the split of industry acceleration capital after launch, comes from TMT equity long/short, and distressed assets, though we expect Asia may grow its share dedicated seeders, such as Borealis Strategic credit in future based on the buoyancy of launch activity. Partners, Investcorp Tages, Stable Asset Most of the strategies are discretionary. The key Management and Inception Point (which was strategy clusters of launches include equity long/ There is naturally a bias to London and the New itself started by a former Tomorrow’s Titan, short including TMT, and credit, event driven, York tri-state area, but in the Americas, we also Keith Anderson). It has also come from hedge special situations and distressed. There is a lot of feature managers based in the Bahamas; Miami; fund managers such as Fir Tree Capital and enthusiasm about the post-Covid opportunity set Baton Rouge, Louisiana; Houston; Nevada and Los Harbert Management Corporation, and from fund for a new distressed debt cycle. Many managers Angeles, as well as Montreal, north of the border managers who have become family offices, such integrate ESG into their investment process in Canada. In Europe, locations include Athens; as David Tepper. to a greater or lesser extent, and some of the Amsterdam; Moscow; Lucerne; Stockholm and strategies are explicitly ESG-oriented, including Vienna. In Asia, the featured managers are in Insurance companies, such as Austria’s UNIQA Ambienta X, Thomist Capital and Longchamp Hong Kong; Singapore; Mumbai and Perth. Insurance Group, have seeded some funds. A Dalton India UCITS Fund. 2 TOMORROW’S TITANS 2021 In the quantitative space, statistical learning and machine learning are areas of growing interest. At least six managers – ActusRayPartners, Blueshift, Leibniz, Rosetta, Manteio and Bayforest – are using some degree of machine learning but all apply it differently in their own ways, and only one of them claims to be applying 100% deep reinforcement learning. Generally, the quantitative managers have previously worked for larger quantitative managers, such as AQR, Man Group, Tudor Capital Europe, and Credit Suisse Asset Management, though one of them – Blueshift – came from a proprietary trading firm and another – Rosetta – was previously at an investment consultant and OCIO. Some firms, such as 2021 ActusRayPartners, are in a sense hybrids between discretionary and quantitative while others such Tomorrow’s as Haven Cove and Shikuma Capital contain both Titans discretionary and quantitative sub-strategies. The largest source of discretionary managers seems to be the large multi-billion managers, such as Millennium Capital Management, Citadel, Point72, Och Ziff and Appaloosa, though some managers have emerged from investment banks such as Goldman Sachs. One manager, Tommaso Mancuso of Shikuma Capital, was previously at pension fund manager Hermes. Another, Bluebell Capital Partners, has morphed from running an advisory firm counselling activists to become an activist itself. A handful of managers have worked for managers Alanda Capital Management, and Eduardo Costa who have featured in previous Tomorrow’s Titans of Calixto Global Investors. reports, and there are some serial launches. The report features only four women, which is As hedge fund managers are sometimes regrettable, though it is worth pointing out that converging with other alternative investment our 50 Leading Women in Hedge Funds report strategies, we have an alternative credit which has run since 2009 has showcased several group, Alpha Blue Ocean, providing financing hundred senior women including portfolio for smaller public companies, and there is managers and investment professionals. also some crossover with private equity. One manager, Fabio Pecce, joined a private equity The majority of launches we have tracked are still firm, Ambienta, to launch a liquid strategy while all-male; some of the nascent female start-ups another, Acer Tree, was backed by a private have not reached a level of maturity, in terms equity firm (Cabot Square Capital). A handful of organization or track record, where we can of managers cross over into private equity realistically include them, though we are keen to investing, separately from their public markets’ monitor such early-stage managers for the long strategies, such as Christian Vogel-Claussen of term, potentially for this and other reports. 3 TOMORROW’S TITANS 2021 defunct after Asbahi identified numerous red structures of companies, banks, sovereigns Andrew Alexander flags including fraudulent accounting practices and asset-based businesses. Exposure is and nefarious related party transactions. The firm mainly in Europe but also opportunistically in Chief Executive Officer and Chief Investment manages approximately $150 million through emerging markets and the US. A wide variety Officer the primary long/short fund and a dedicated of instruments, ranging from post-reorg’ ActusRayPartners Limited vehicle invested in MiMedx. Since inception, the equity to bonds, loans, asset-backed paper and Hong Kong strategy has annualized over 24% per year with liquidation claims, can be traded based on deep, low correlation to US equities. Prior to founding fundamental bottom-up research. The strategy Andrew Alexander co-founded ActusRayPartners Prescience Point, Asbahi was an investment can hedge unwanted commodity, currency or in 2019 with Raymond Chan and Patrick Cheung. analyst with several hedge fund managers in New macro risks, and can go net short. Performance There is a collaboration agreement with Sun Hung York: Sand Spring Capital, Cohanzick Management has annualized in low double digits between Kai & Co which provides longer term assets under and later Kinderhook Partners. Asbahi has an MBA inception and December 2020 with a high hit management, working capital, office space and and a BS in Microbiology from

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