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JULY 14, 2008 Shifting Sands VOL. IX, NO. 28 UBP PREPS HF/PE HYBRID HF Returns, Inflows Suffer Swiss private bank Union Bancaire Privée will launch in August what is believed to be the Performance and new asset flows have first to invest in hedge funds initially and then gradually morph into a both taken a hit in the first half, play. Enzo Narciso, head of UBP’s private equity team, will manage the according to Hedge Fund Research. SquareInvest Distressed Opportunity fund in London. See story, page 2 The fund will seek to take advantage of distressed opportunities, said Morten Thorsen, deputy head of private equity at the $121 billion firm. “We are recognizing the fact that The Americas (continued on page 16) Calif. Fund Shuts Down 3 NONPROFIT TO SUE SEC OVER ACCESS Clarium Assets Up 3 Philly Hires Hedge Funds 3 TO HEDGE FUND WEB SITES Horton Point Starts Investing 4 A nonprofit organization is set to file a suit against the U.S. Securities and Exchange N.Y. Police, Fire Eye FoFs 5 Commission, petitioning for access to password-protected hedge fund Web sites, according Richmond Seeking Consultant 5 to Phil Goldstein, the founder of Bulldog who is engaged in a similar legal battle. Arias Holds Closing 7 He declined to name the group but said that its claim argues that the secrecy of hedge fund sites infringes on freedoms of the press and speech. Europe The nonprofit is expected to take action within the next few weeks. The suit will not Global Advisors Wins With (continued on page 15) Commodity Plays 7 Blacksquare Adds Macro Exposure 7 EX-FORTRESS MD DEBUTS ASIA Fincere Plans New Funds 8 PACIFIC FUND Fund Analytics Pitches FoF 8 Alexander Medd, former managing director and portfolio manager at Fortress Investment Group, has formed Asia Pacific Bucephalus Capital Management Advisors and launched the Olympic Shorts Recommended 8 Bucephalus Special Situations Fund. It is already up 16% in its first Japan L/S Fund Seeks month. Medd manages the fund from Hong Kong. Seed Money 9 Bucephalus—named after Alexander the Great’s horse— invests long and short in resources, telecoms and property companies listed in Hong Kong, Departments Malaysia and Australia. As the U.S. and European economies continue to weaken, Asian Data Zone 9 (continued on page 15) Search Directory 11 Mandate Scoreboard 12 HARCOURT UNVEILS PENSION-FRIENDLY ABL FoF

COPYRIGHT NOTICE: No part of this publication may Harcourt Investment Consulting has rolled out an asset-based lending fund of hedge be copied, photocopied or duplicated in any form or by funds, which it hopes will be able to form part of a ’s bond any means without Institutional ’s prior written consent. Copying of this publication is in violation of the portfolio rather than its hedge fund allocation. This would mean Swiss Federal Copyright Law (17 USC 101 et seq.). Violators may be subject to criminal penalties as well as liability pension funds could invest more in the strategy than they would in for substantial monetary damages, including statutory other hedge fund offerings, since institutional investors traditionally damages up to $100,000 per infringement, costs and attorney’s fees. Copyright 2008 , have a higher allocation to bonds than alternatives, noted Christophe Inc. All rights reserved. ISSN# 1544-7596 Grünig, cio at the $5.5 billion firm. Belmont (Lux) Asset Based Lending is For information regarding subscription rates and electronic licenses, please contact Dan Lalor at awaiting approval from the Swiss authorities to be offered as part of a (212) 224-3045. (continued on page 16) Christophe Grünig Check www.totalalternatives.com during the week for breaking news and updates. AIN071408 10/7/08 18:19 Page 2

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Industry Backs FoF Guidelines Managers have endorsed plans by the Management Association for what would be the first global guide to sound practices for EDITORIAL PUBLISHING funds of hedge funds. AIMA will publish its guidelines in early 2009. “[It’s] a TOM LAMONT BRISTOL VOSS Editor Publisher long overdue development,” said Ian Morley, ceo at Dawnay, Day in London. (212) 224-3628 STEVE MURRAY “If standards don’t improve then the industry won’t grow and mature,” said Deputy Editor ANTHONY DeROJAS Senior Marketing Manager ROBERT MURRAY Sunil Chadda, head of alternative investments at Carne Global Financial (212) 224-3099 Managing Editor and Services. “This leaves the door open for the regulator. We must adopt ‘best London Co-Bureau Chief ARCHANA KAPUR (44-20) 7303-1705 Associate Marketing Manager practice’ and self-regulate or ultimately risk being regulated,” he added. DOUG CUBBERLEY (212) 224-3421 Managing Editor-Asia and JAMES MERRINGTON Most institutional investors entering hedge funds invest via funds of funds, but Hong Kong Bureau Chief Asian and European Marketing HARRIET AGNEW Manager [London] not enough guidance for funds of funds has been laid down and consolidated, (44-20) 7779-8023 Senior Reporter [London] Andrew Baker, deputy ceo at AIMA, told AIN. Recent market turbulence has (44-20) 7779-8261 VINCENT YESENOSKY SUZY KENLY Senior Operations Manager thrown into sharp relief some aspects of risk management, particularly liquidity, (212) 224-3057 Senior Reporter he observed. Funds of funds have two layers of complexity when it comes to (212) 224-3978 DAVID SILVA CORRIE DRIEBUSCH Senior Fulfillment Manager (212) 224-3573 liquidity—their own liquidity and that of the underlying managers. Moreover, the Associate Reporter (212) 224-3271 additional fees that investors pay funds of funds mean that expectations of due SUBSCRIPTIONS/ SARAH ILENE KLEIN ELECTRONIC LICENSES diligence are higher, noted Rob Kelly, founder of Baronsmead Brokers. Associate Reporter (212) 224-3648 One year - $2,645 (in Canada add $30 postage, others outside U.S. add $75). The guidelines “can only help [investors] distinguish the wheat from the VENILIA BATISTA AMORIM London Co-Bureau Chief DAN LALOR chaff in a more efficient manner,” said Jeremy Rowlands, co-founder of (44-20) 7303-1718 Director of Sales (212) 224-3045 Caliburn Capital Partners. Take-up of the guidelines is voluntary, but Baker STANLEY WILSON MATT COLBECK Washington Bureau Chief Account Executive hopes investors will pressure managers to endorse them, and that they will (202) 393-0728 (212) 224-3568 become a market standard. KIERON BLACK AIDEN NEVILLE Sketch Artist Account Executive [London] (44-20) 779-8076 [email protected] PRODUCTION HFR: Hedge Fund Performance, Inflows Down DANY PEÑA REPRINTS Director DEWEY PALMIERI Average hedge fund returns and asset inflows have both suffered in the first six LYNETTE STOCK, DEBORAH ZAKEN Reprint & Permission Manager Managers (212) 224-3675 months of the year, according to data gathered by Hedge Fund Research. The [email protected] MICHELLE TOM, MELISSA Chicago firm’s Fund Weighted Composite Index was down 68 basis points last month, ENSMINGER, BRIAN STONE, JAMES BAMBARA, JENNIFER BOYD CORPORATE bringing first-half performance to -0.75%— the worst since HFR began tracking Associates GARY MUELLER Chairman & CEO JENNY LO returns in 1990. Only $16 billion of new capital was allocated to hedge funds in the Web Production & Design Director CHRISTOPHER BROWN first quarter, the lowest three-month figure since Q4 2006, according to the firm. President ADVERTISING AND STEVE KURTZ The credit crisis has played a major part in hedge funds’ misery. Strategies BUSINESS PUBLISHING Chief Operating Officer JONATHAN WRIGHT focused on emerging market, arbitrage and credit opportunities have Publisher ROBERT TONCHUK performed worst: convertible arbitrage declined by more than 7.5% in the first (212) 224-3566 Director/Central Operations & Fulfillment ERIK KOLB Customer Service: PO Box 5016, half, with Asia ex-Japan strategies down around 14%. Editor, Business Publishing Brentwood, TN 37024-5016. (212) 224-3785 Tel: 1-800-715-9195. Fax: 1-615-377-0525 UK: 44 20 7779 8704 Not all strategies have performed poorly, however. Global macro funds have PAT BERTUCCI, MAGGIE DIAZ, Hong Kong: 852 2842 6910 LANCE KISLING, ADI HALLER E-mail: [email protected] gained by over 7% on average this year, according to the HFRI Macro (Total) Associate Publishers Editorial Offices: 225 Park Avenue Index. Within this group, CTAs have been boosted by rising commodity prices BRIAN GOLDMAN South, , NY 10003. Advertising Production Manager Tel: (44-20) 7303-1705 [London] and returned more than 12%. Perhaps unsurprisingly, dedicated short-sellers have (212) 224-3216 Email: [email protected] also made money, up on average 8.5% in June and more than 12% year-to-date. LESLIE NG Alternative Investment News is a Advertising Coordinator general circulation weekly. No statement HFR data also suggest that investors are seeking to put money with larger (212) 224-3212 in this issue is to be construed as a recommendation to buy or sell securities and better-known managers, rather than committing to smaller firms. During or to provide investment advice. Alternative Investment News ©2008 the first quarter, investors allocated more than $30 billion to hedge funds with Institutional Investor, Inc. ISSN# 1544-7596 of over $500 million, and cut investments in smaller Copying prohibited without the hedge funds by $14 billion. permission of the Publisher. It is important for investors to take on a long-term view when investing in hedge funds, said one industry observer in New York. “The clear winners will be those with longer investment horizons,” he said. Investors that look at returns month-to-month, such as funds of funds, are more willing to redeem their money, but patience is essential in these turbulent markets, he added.

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The Americas Trading Group To Expand Services Ex-Clarium Trader Sets Advanced Financial Applications, a technology provider, is Up Hybrid Fund looking to add the ability to conduct swaps as well as integrate Convexus Advisors and Clarium Capital alum Matt Kratter has options analytics to its technology model. CEO Pat Lynch said set up Kratter Capital and the updates are a response to client interest. launched a hybrid AFA services about 50 hedge funds whose assets under hedge fund that invests management are $500 million or fewer, money managers and in equity options with family offices. The service allows its clients to manage multiple a macro overlay. The daily positions in U.S. equity trades, U.S. equity options trades fund launched in and non-U.S. equity trades. In the next few months Lynch said early June with about AFA’s software will allow clients to show Greek calculations by $8.5 million. integrating with a yet-to-be-determined options analytics San Francisco- provider. In the next six to eight months, Lynch said, AFA will based Kratter Capital look at the potential for using credit derivatives in its technology has been in the works since which will allow clients to use swaps. Kratter left Convexus in March last year. The fund will invest in mispriced options. Kratter said value San Fran Quant Fund Shuts Down investors do not pay a lot of attention to options and options traders pay no attention to valuation, so he decided to launch a Quantitative hedge fund firm Convexus Advisors has shut down. strategy that combined both disciplines. Former Chief Operating Officer Jonathan Ross attributed the Kratter Capital launched with seed money from PayPal close to market conditions but declined to comment further. and Clarium Founder Peter Thiel and Ben Borton of Convexus traded U.S. equities and had a $1 million Borton Hermeneutics. The fund has an investment investment minimum with a 2/20 fee structure minimum of $1 million with a 2/20 fee structure. Kratter (totalalternatives.com, March 2007). The firm was founded by runs the fund by himself, but is looking to build a team to Richard Griffin, who was the main architect of the firm’s support him. Since launch the fund is down 83 basis points. trading models. Further comment and details about the shut down could not More On The Way be obtained by press time. Philadelphia Starts Direct Clarium Nearly Doubles HF Investing AUM To $7.35B The Philadelphia Board of Pensions & Retirement approved commitments of up to $12.5 million each to four hedge funds at San Francisco-based Clarium Capital Management is up about a June 26 meeting. They are event-driven funds managed by 58% year-to-date, a return that along with new investments Paulson & Co., Marathon Asset Management and Taconic brings total assets under management to $7.35 billion. The fund Capital Advisors, as well as a convertible arbitrage strategy run started 2008 with $3.8 billion under management. by Aristeia Capital. The managers were recommended by Aksia, Clarium, the global macro hedge fund firm run by PayPal co- the fund’s hedge fund consultant. The $5.3 billion Philadelphia founder Peter Thiel, benefited from betting against equities and Public Employees Retirement System plans to hire eight-to-10 the dollar and taking long positions in oil. Managing Director more hedge funds to fill its 3% target to direct hedge funds, said Kevin Harrington said the fund is remaining short equities but CIO Chris McDonough. has dramatically scaled back its trade on oil, shifting to a flat The fund wanted to get access to event-driven strategies to exposure. Clarium is continuing to short the dollar. Against the take advantage of market opportunities such as distressed debt, yen, Harrington said he wouldn’t be surprised if the dollar value and McDonough thought that the three funds selected were returned to March lows of about ¥97 in the near future. experienced and well-positioned to do so. The board was also Clarium invests in commodities, currencies, fixed-income and impressed with all four managers’ investment strategies and track equities. It returned 40.3% in 2007. records with low volatility. Philadelphia wanted to tap into direct

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The Americas (cont’d) hedge funds to diversify and save on fees. Explora Delays Offshore Launch McDonough initially used funds of funds to enter the asset São Paulo-based firm Explora Investments has delayed the class, but will now move more exposure to direct and hired Aksia launch of its offshore long-only fund. Originally planned to last summer to advise on investments. Arden Asset begin trading in June (totalalternatives.com, Feb. 29), Explora’s Management, Mesirow Financial and Goldman Sachs Asset partners decided to postpone the launch of the Explora Long Management handle funds of funds. They will not be terminated Only fund until the end of the summer, in order to raise more but their mandates could be cut to fund direct investments. assets, said André Duvivier, head of investor relations. Duvivier Funding for the first four hedge funds came from cash, is approaching U.S.- and Europe-based investors for the offshore McDonough said. iteration. He declined to offer the firm’s goals for asset growth or how much money has already been raised. Aurarian Preps Clean Energy Fund The offshore fund will invest in South American equities. Its New York firm Aurarian Capital plans to launch a clean energy onshore version, the Explora Long Acoes fund, is only available to hedge fund on Oct. 1. Founder Jason Gold expects the fund to Brazilian investors. It began trading in January. launch with $60-80 million, with the potential to grow to $500 The firm’s flagship fund, a Brazil-focused long/short strategy, million. The Aurarian Capital Clean Energy Asset Based Lending launched last August (totalalternatives.com, Oct. 19). Duvivier Fund will invest in small alternative energy companies, declined to cite returns for both funds. specifically those working with solar thermal energy, geothermal energy, biofuels and wind. Gold said he already has two deals in Energy Fund To Triple Assets the works with a biofuels company and a geothermal energy company. The project finance fund will have a New York hedge fund New Energy Fund will triple its assets by of 2% and an additional fee of 30% for returns above 12%. The September, as the $13.5 million firm has identified several investment minimum is $1 million. family offices and high-net-worth individuals who will allocate Kent Larsen, managing director, joined on June 1 to manage $25 million in total by early autumn. Despite the New Energy the fund. Gold said Larsen has 30 years experience and has Fund suffering poor returns this year—it is down nearly 20% managed $7 billion in similar projects. through July 8 and is down 3% this month—the fund is Aurarian Capital’s flagship equity fund of the same name has receiving plenty of interest. “So many people want to have under $100 million. some assets working in this space,” Founder Mark Townsend Cox said. “Wind and solar are the pillars of renewable energy.” One investor will put in $15 million in the fund in August Horton Point Rolls Out First and another will allocate $10 million in September. This month, Investments an investor put in $700,000, said Cox. He hopes to reach $50 Dimitri Sogoloff’s Horton Point has allocated a quarter of million by year’s end. Cox declined to name the investors. assets for its new quantitative strategy, having rolled out the Cox sees plenty of positive fund on May 1. The New York firm has taken exposure to opportunities in energy IPOs despite equity indices, a fixed-income arbitrage strategy and a re- the increased volatility in the insurance strategy. Credit arbitrage strategies are set to be markets. The fund invests in added in the first half of this month and volatility arbitrage both private and public was due to be added to the portfolio in June. Horton Point companies, and will go long officials did not return calls and it could not be ascertained Catch the Wind, a fiber- whether these strategies have yet been added. optic laser technology The Gallery QMS Fund was up 44 basis points in its first company in Manassas, Va., month, primarily due to its equity and fixed-income arbitrage in the next few weeks after its IPO is announced. The company exposures. Sogoloff declined to quantify assets at launch but makes a laser radar system which enables wind turbines to be said that the fund was in the $100-200 million range aligned more accurately for oncoming wind. “There is about 10- (totalalternatives.com, May 5). The investment minimum is 20% more power to extract from turbines [than what is extracted $5 million with a 2% management fee and a 20% now],” Cox said. performance fee. The fund is invested in Global Green Solutions, which

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The Americas (cont’d)

produces algae oil using bioreactors. It bought into the company five plans, did not return calls. at $1 a share, and even though it’s now trading at 45 cents, Cox Consultants from NEPC, SIS, Callan Associates and likes the company. He believes algae oil offers greater Rocaton Investment Advisors, as well as several hedge funds opportunities than corn ethanol. “Corn ethanol doesn’t do a and funds of funds, all gave educational presentations at the damn thing,” Cox said. “It makes food more expensive […] and March meeting. Callan and Rocaton advise the New York City makes it impossible for Mexicans and Argentineans to eat bread.” Employees Retirement System and the The average position size in the fund’s portfolio is 3%. Teachers Retirement System The fund lost out on a big gain recently when it pulled out of of the City of New York, German power company ersol Solar Energy a month before it was respectively. New York bought by Bosch. The fund held ersol shares until May and sold City Comptroller William them as they were trading sideways. The increased volatility in the Thompson also oversees solar sector also led the fund to sell its position, said Andrew the New York City Board Kovacic, analyst at the firm. In June, Bosch acquired ersol and the of Education Retirement share price shot to €100 from €45. “I hit myself there,” lamented System. It could not be Cox.“[Previously, Bosch was] a conservative company that hadn’t learned whether the other gotten involved in anything green.” three funds will follow suit. Laura Rivera, spokeswoman for the Comptroller’s office, said the funds are Big Apple Guns & Hoses not yet sure how much they will invest in hedge funds and To Seek FoFs declined to comment further. The $21 billion New York City Police Pension Fund and the $9 Roger That billion New York City Fire Pension Fund are issuing requests for proposal in about a month for funds of hedge funds—the Richmond Seeks New Consultant Gotham plans’ first foray into the asset class. Both systems are The City of Richmond (Va.) Retirement System is performing a planning to invest about 3-5%, according to officials familiar consultant search and will identify one by August. The $550 with the funds. The investment staff has been looking at hedge million pension fund has been using Rogerscasey for over 10 funds for some time as a way to diversify their portfolios and years, but as the contract expired last month, Richmond is improve returns. But trustees were concerned about risk and considering other options. “We have been happy with the service transparency. They have been getting more education from [Rogerscasey has] provided over time. But as fiduciaries, we think consultants and managers on the asset class and have now it’s important to meet with other consulting firms, and make sure become comfortable enough to invest, one official said. we hire the best consulting firm going forward,” said Donald The New York City Retirement Systems received an Steinbrugge, a member of the Richmond’s investment committee. educational presentation on hedge fund strategies at a March Richmond may continue to use Rogerscasey, he added. board meeting from consultants and managers. Trustees of the Claire Shaughnessy of Rogerscasey handles Richmond’s Police and Fire plans have since been gathering more account and has advised the pension on asset allocation and information from advisors and hedge funds. Meanwhile, Police manager selection. Steinbrugge declined to elaborate on reasons and Fire’s consultants, Strategic Investment Solutions and for considering new consultants or discuss specific firms the NEPC, respectively, have been working on drafting the RFPs pension is considering. Shaughnessy declined to comment. and criteria. The plans are going in via the funds of funds Richmond will begin to allocate to private equity funds for route, as opposed to direct hedge funds, as a safer way to enter the first time, and will make its maiden private equity the arena and get better diversification, according to officials. investments once it decides on a consultant. “We think long Funding will come via rebalancing from equities and bonds. term, the plan will benefit from having an allocation to private The five New York City funds, with total assets of $115 equity,” Steinbrugge said. “Over long periods of time, [private billion, have been looking at hedge funds and other equity] outperforms other asset classes.” Roughly 14% of the alternatives since late last year after raising their combined pension’s portfolio is invested in hedge funds, and the target to investments that fall outside of guidelines to 25% percentage will increase to 18% after investing in private equity. from 15%. CIO Rita Sallis, who oversees investments for all Richmond will also increase its investments in hedge funds,

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The Americas (cont’d) he added. The pension is currently invested in three funds of He previously worked at Goldman Sachs for more than a decade, hedge funds. in the firm’s private client services division. Steinbrugge is founder of third party marketing firm Agecroft Partners. Arias Holds Second Jayhawk Lining Up First Closing New York private equity firm Arias Resource Capital Fund Investments For China Fund has held a second closing for its flagship fund. The ARC Fund, Jayhawk Capital Management is preparing to make the first which invests in medium-sized metal producers in Latin round of investments for its second private equity fund, which is America, closed earlier this month at $90.6 million. The firm focused on opportunities in China. Jayhawk Private Equity Fund expects to have its third closing at $300 million, according to 2 held its first closing in April with $130 million from high-net- a source familiar with the firm. Founder Alberto Arias worth individuals. An investment analyst said the firm is in the declined to comment and no other details could be learned. process of identifying investments. The fund will focus on The fund held its first close at $100 million in October Chinese late-stage growth equity companies. The analyst (totalalternatives.com, Nov. 30). Arias is seeking to invest in declined to give the intended size of investments. companies that produce copper, nickel, iron ore and some Kent McCarthy founded Kansas City-based Jayhawk in 1995. precious metals.

Europe Global Advisors Gains Blacksquare Ups Macro Exposure With Commodity Longs In Caxton-Only FoF Global Advisors’ systematic commodity Blacksquare Capital has added more global macro exposure to a futures strategy was up 2.04% in June, with fund of funds that invests only in three strategies managed by Bruce all sectors contributing except for precious Kovner’s Caxton Associates. The Blacksquare Capital Access Fund has metals. The biggest winners were long upped its position in Caxton Global Investments at the expense of two positions in crude oil, soybeans, gasoil, U.K. equity-focused funds. The outlook for the U.S. economy and the natural gas and soybean meal. The fund lost stock market remains bearish, and macro strategies are expected to money in wheat, sugar, cotton and silver. This generate the highest returns in a weaker growth environment with Rus Newton brings the fund’s return for the first half of higher inflation, CEO Christopher Peel told AIN. the year to 16.44%. The global macro fund accounts for 69% of the fund of The Global Commodity Systematic fund trades inter- and intra- funds’ portfolio, compared with 50% at the start of the year. This commodity spreads as well as outright commodities. “Commodity strategy is favourable in volatile conditions because the manager markets have become rather jittery over the possibility that [the] can quickly move capital between asset classes and geographies, U.S. will attempt to legislate speculators out of the markets,” wrote explained Peel. Exposure to the long/short Caxton Equity Growth Co-Founders Danny Masters and Rus Newton in a letter to fund has been cut to 21% from 25%, and the long-only Caxton investors. In the past year the fund’s Sharpe ratio has been over 2, Alpha Equity fund now accounts for 10%, down from 25%. noted Masters, meaning that when commodities markets take a Blacksquare will decide at the end of July whether to further correction, the fund should avoid any large drawdown. In June, reduce its positions in the equity strategies, said Peel. Although the fund’s net exposure was 40%, compared to many other equity markets tend to drift down in the summer months, bad commodities funds which are highly leveraged, he added. news is generally priced in before it happens, he noted. The The fund took in over $35 million in June, bringing assets up fund has maintained enough exposure to the equity markets to to $185 million. Global Advisors is seeking to grow its total assets benefit should they reach a bottom and reverse, said Peel. The under management to $500 million from $225 million by the fund was down 1.26% in June. It is up 10 basis points for the end of the year (totalalternatives.com, June 9). Masters said the first half of the year. Peel hopes to grow its assets to $275 Global Commodity Systematic fund is marginally down in July. million from $220 million this year.

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Europe (cont’d) Carne Sets Up Valuation Service London Start-Up Touts European FoF Carne Global Financial Services has launched a service to help Fund Analytics Investments Management is seeking assets for hedge funds and other asset managers oversee the valuation of the first time for its fund of European long/short equity and underlying investments. As hedge fund strategies become more market-neutral hedge funds. The FA European Conservative Fund, diverse, valuation is becoming more complicated and less which rolled out in January, is based on a manager-selection transparent, Sunil Chadda, head of alternative investments, model developed by Director Amir Sajjadi. He declined to told AIN. quantify assets under management or give targets for asset-raising. Carne’s Hedge & Traditional Fund Valuation ‘Best Practice’ Fund Analytics is targeting private banks and institutions in Service consists of a team of consultants who will scrutinise Europe. The firm has lined up a third-party marketing firm to documentation relating to a fund’s investments and marketing, co-ordinate the push, which will begin later in the summer. applying Carne’s valuation methodology. Carne will then make Sajjadi will travel to Switzerland at the end of the month to talk recommendations to improve pricing where necessary, and can with private banks. The minimum investment is €50,000. Fees assist in implementation. Fund managers that have applied are 1.5/10. Carne’s recommendations will be able to claim compliance The fund was up 2.14% in June, bringing returns this year to with the Hedge Fund Working Group’s recommendations on 2.57%. Sajjadi said it is a suitable strategy with which to hedge a valuation, said Chadda. Carne charges £1000-1500 a day and long-only European fund. In market upturns the fund has shown Chadda said he expects a typical evaluation to take between six a high correlation to the MSCI Europe Index, producing positive and 20 days. The service has been trialled with a large hedge returns 85% of the time, and in market downturns it has shown a fund manager in London and the alternatives arm of a U.K. low correlation, returning positively half of the time, he added. asset manager. Carne was founded in 2004 by John Donohoe. It has about Asia Pacific $200 billion in assets under supervision. Short Equity Strategies Suggested Fincere Plots More Hedge Funds For Olympic Fallout Start-up emerging markets manager Fincere is planning to roll out a Louis Capital Management is recommending shorting series of sector- and region-focused hedge funds. These will be more strategies focused on equity and commodities in China, to specialised than its first strategy, the Fincere Emerging Markets capitalize on adverse effects of the Olympics that may have Portfolio Fund, which is set to launch later this month. The firm will been overlooked. wait for six-to-12 months for the first fund to establish a track record A report by the firm says that a number of sectors may be before rolling out more strategies, said Manuel Dopazo, director. affected, including tourism, construction, media and The new emerging markets fund will invest in fixed-income, technology. “Overall, we fear that once the Olympics-related commodities and derivatives in emerging markets globally, to take investment boom dissipates after the Games, many companies advantage of the commodity-driven growth in these markets. and possibly some commodities will be negatively impacted,” Subsequent funds are likely to be private equity-style offerings, as the report states. Sohu, Vision China, China Digital TV and the market for liquid investments is increasingly crowded, said Ctrip, are cited as most at risk. Dopazo. Fincere will draw on its relationships with local banks Robbert van Batenburg, head of research in New York, and money managers to execute investments, he added. highlighted shorting opportunities in cement and construction. The new fund is managed by Dopazo and Natalia Navarro. It He explained that production for these will stop on July 20 has been seeded with $20 million and Fincere is seeking to grow because of the Olympics; activity is also artificially high in the this to $250 million in the next two years, at which point the wake of the earthquake in Sichuan province. fund would soft-close. Fincere will initially make a push for Battenburg said China has been preparing for the Olympics assets from high-net-worth individuals who have benefited from by stockpiling oil and steel. “People have been puzzled about the commodities boom in South America, said Dopazo. It will why, when Europe and U.S. economies have been drawing back, then target U.S. and European institutional investors within a there has continued to be inflation in some of the [global] year of launching.The minimum investment is $100,000. commodities markets [...] This may be one of the reasons.” He LaSalle Global Trust Services is the administrator. noted that China is not only stopping petrol production on this

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Asia Pacific (cont’d)

date, but is also taking cars off the road. “This may well have brings in additional assets but also one that will assist him in some sort of impact, but there’s a possibility it won’t so options marketing his firm. Wada said he is willing to negotiate are probably the best way to deal with it.” equity in order to secure seeding. Wada Capital Japan Trust is a market-neutral strategy that Japanese Equity Fund Seeks has returned 8.6% year-to-date and 3.3% in June. Wada said his fund has fewer than $10 million in assets under Seeding Partner management, but upon growth he already has plans to get into Quantitative hedge fund firm Wada Capital Management is other markets, such as in Europe or other parts of Asia. seeking a seeding partner for its Japanese equity fund. The fund has an investment minimum of $500,000 and a fee Founder and former Barclay Global Investors’ researcher structure of 2/20. There is a fund capacity of $500 million. The Sakae Wada said he is looking for a relationship that not only fund, based in El Cerrito, Calif., is run single-handedly by Wada. Data Zone

PERFORMANCE SNAPSHOT: LONG/SHORT EQUITY HEDGE FUNDS The table below displays some of this year’s top performing long/short equity hedge funds, according to data provided by Eurekahedge. May ‘08 2008 YTD 2007 Annualised Sharpe AuM Fund Manager Region Return return return Std Deviation Ratio (US$ Mln) Eurekahedge Long / Short Equities - - 1.91 -1.92 14.13 6.91 1.20 - Hedge Fund Index

Long Short Equities Mathews Capital Sabre Fund Mathews Capital Partners Pty Global 75.40 143.29 105.11 66.35 1.24 1977 Mathews Capital Tomahawk International Fund Mathews Capital Partners Pty Global 50.31 95.56 80.42 66.90 0.53 155 OCM Energy Total Return Fund Origin Capital Management North America 5.12 64.55 -24.19 24.37 0.45 15 ChinaFund Cayman Senturion Assets Greater China 3.01 35.89 10.52 32.33 1.40 76 Creststreet Energy Hedge Fund Creststreet Capital Corporation North America 8.27 32.14 41.17 23.00 0.88 6 Jaguar Australian Leaders Long Short Fund Limited Jaguar Asset Management Australia / New Zealand 19.45 28.39 9.44 12.60 0.87 14 Hyerdale Capital Hyerdale Management North America -7.44 27.48 -8.03 35.00 0.38 1 Strand US Fund Strand Asset Management North America 1.39 24.28 11.92 24.41 0.49 1 Artradis Russian Opportunities Fund Artradis Fund Management (BVI) Eastern Europe & Russia 2.87 24.11 81.45 19.84 3.70 170 Ayrie Golden Eagle Global Offshore LYZ Capital Global 10.17 23.53 -18.79 15.24 0.15 309 Front Street Energy and Power Performance Offshore Fund Front Street Capital North America 11.30 22.89 0.92 18.32 1.23 244 Rosen Offshore Limited Rosen Capital Management North America 2.18 22.36 37.81 17.37 0.42 34 Lucas Energy Total Return Offshore Lucas Energy Offshore North America 6.93 21.79 24.79 16.69 1.68 719 Polaris Constellation Fund Polaris Capital Middle East & Africa 0.52 21.50 3.98 9.68 3.93 20 Horizon Growth Fund NV Horizon Management Emerging Markets 18.60 21.21 36.50 29.16 0.68 15 Sprott Capital Sprott Genpar North America 14.06 20.11 41.00 21.04 1.28 206 Financial Institution Partners III Hovde Capital Advisors North America 7.67 19.69 35.89 12.18 1.31 146 Henderson UK Equity Long Short Fund Henderson Global Investors Europe 5.15 19.37 9.48 10.21 0.88 119 Jasper Partners Jasper Asset Management North America -1.44 19.32 15.07 16.33 0.67 5 Sprott Hedge Fund Sprott Asset Management North America 12.77 18.39 14.01 21.19 1.17 721

Regional Long / Short Equities Indices Eurekahedge Asia Long / Short Equities Hedge Fund Index - - 0.42 -6.20 18.30 7.19 0.98 - Eurekahedge Europe Long / Short Equities Hedge Fund Index - - 1.76 -0.52 7.42 7.21 1.07 - Eurekahedge Latin American Long / Short Equities Hedge Fund Index - - 4.50 2.44 16.05 14.98 0.69 - Eurekahedge North America Long / Short Equities Hedge Fund Index - - 2.66 -0.13 11.50 7.12 1.06 -

Notes: * Ranked by 2008 YTD Return Eurekahedge Commentary The Eurekahedge Long/Short Equities Hedge Fund Index rose 1.9% in May, against a 1.1% return of the MSCI World Index, suggesting that managers of the strategy largely exploited opportunities on both the long and short side. In terms of regional mandates, North America was up 2.6%. Managers in the region made decent gains from long exposure to technology and consumer-related sectors, while exposure to the industrial, materials and real estate sectors proved profitable to the short book. European managers returned 1.8%, benefiting from the decent performance of energy and material-related stocks; exposure to Eastern Europe also proved rewarding, as regional equities rose nearly 13%. Latin American players (4.5%) fared impressively, as regional stocks rallied strongly (9.1%); investments across the oil and gas sectors proved favorable. Asian managers (0.4%), however, being negatively impacted by the sharp equity draw- downs across regional emerging markets, recorded subdued returns. Within Asia, however, Japan- and Australia-focused managers fared well; long exposure to the regional capital goods sector assisted the former, while the latter benefited from the decent performance of the regional energy sector, during the month.

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July 14, 2008 www.totalalternatives.com Alternative Investment News

Alternatives Manager Search Directory Powered by: iisearches.com The following directory includes search activity for the week. The accuracy of the information, which is derived from many sources, is deemed reliable but cannot be guaranteed. All amounts are in US$ millions unless otherwise stated.

Total Mandate Mandate Asset Fund & Location Assets Size Region Type Consultant Comments Air Canada Pension Trust Fund, 10,500 - Canada Not specified Unknown The fund plans to increase its alternatives allocation after asset Montreal studies scheduled for the first quarter of 2009. It presently invests 0.01% each in real estate and private equity. Alaska State Pension Investment 18,600 - US Absolute return Callan Associates The fund has increased its allocation to absolute return strategies to Board, Juneau 6% from 4%. No further details were available. Arizona State Retirement System, 25,800 - US Infrastructure, distressed debt Mercer The scheme plans to analyze its infrastructure and distressed debt Phoenix portfolios. The move may lead to manager searches. There is no timeframe for a decision. Boeing Company, Chicago 51,000 - US Hedge funds Russell Investments The plan will increase its allocation target to hedge funds to 6% from 3% by the first quarter of 2009. It is unsure if the move will lead to manager hires. CARE Super, Melbourne 3,600 - Global Not specified JANA Investment The fund will review its alternatives portfolio for better investment Advisers opportunities with the help of JANA and an in-house team by the second quarter of 2009. Cargill, Inc., Minneapolis 1,800 36 US Not specified Albourne America The fund is looking to commit up to $36 million to alternative Advisers strategies upon completion of its asset studies in the second quarter of 2009. It may hire external managers. Ford Belgium Pension Fund OFP, 170 - Europe Infrastructure Unknown The fund plans to make a maiden foray in European infrastructure Genk with the help of its in-house team by the third quarter of 2009. No specifics for the amount or funding have been set yet. Marsh & McLennan Companies, Inc., 4,400 - US Not specified Evaluation Associates The fund plans to invest in alternatives after its asset studies New York scheduled for year’s end. Ontario Teachers’ Pension 108,500 - Global Infrastructure None The scheme plans to branch out further into alternative investments Plan Board, Toronto including infrastructure. It may consider manager hires and make additional infrastructure commitments later this year. Stichting Pensioenfonds FLUOR 218 - Global Private equity, infrastructure None The fund is planning first forays into private equity and infrastructure Nederland, Haarlem with the help of its in-house team by the end of 2009. Stichting Pensioenfonds TDV, 340 - Global Infrastructure None The fund is planning to make a maiden foray into infrastructure by Deventer, The Netherlands the fourth quarter of 2008. It may hire additional managers for the effort. Stichting Pensioenfonds van de 8,800 - Global Infrastructure, timberland Unknown The scheme is looking to add global infrastructure and timberland ABN AMRO Bank, Amsterdam for the first time by mid-2009. Taiwan Postal Savings Fund, Taipei 131,587 - Global Not specified None The fund is eyeing alternatives for the first time as a part of its diversification strategy. It is considering all types of alternatives with the exception of hedge funds as Taiwanese legislation does not permit investment in the asset class. The Vanguard Group, Valley 1,300,000 39,000 US Real assets Unknown The fund is planning its first allocation to alternatives and is seeking Forge, Pa. to invest up to 3% in real assets. It will hire managers for the expected commitment early next year. Thomson Directories Pension Fund, 63 - Global Dynamic asset allocation, PSolve Asset The scheme plans to move into dynamic asset allocation for the first Hampshire, UK hedge funds Solutions time. It is seeking external managers for the effort, with the help of PSolve. Thomson was also considering a move into hedge funds but decided not to invest in them for three years, due to lack of confidence in returns. Unilever Pensioensfonds Progress, 4,000 - Global Commodities Unknown The fund is likely to start investing in commodities during 2008 as Rotterdam part of plans to increase the number of asset classes. No further details are available. Winnipeg Civic Employees’ Pension 4,500 - Global Private equity None The scheme for the first time added private equity securities this Program & The Winnipeg Police year and plans to round out its allocation in the short-term. No Pension Plan, Canada further details are available. York University Pension Fund, 1,300 - Global Currency hedging, Towers Perrin The fund may make a maiden foray into currency hedging strategies Toronto infrastructure and the move could lead to manager searches. There is no timeframe for a decision. The scheme may also expand its infrastructure portfolio during the fourth quarter. It made its maiden allocation to the asset class at 10% last year. Windsor Pension & Life Assurance 160 4 Global Tactical asset allocation Jagger & Associates The scheme is seeking external tactical asset allocation managers Scheme, Telford, UK for 2.5% of its total portfolio, as it switches from passive to active portfolio management. Simon Jagger of Jagger & Associates is assisting with manager searches. The scheme will shortlist and interview managers by September. Holyoke Retirement System, . 250 - US Private equity Segal Advisors The fund has issued an RFI for private equity managers. The Holyoke, Mass allocation size will be determined after a July 16 board meeting. Indiana Public Employees’ Retirement 16,600 320 US Commodities Mercer The scheme has issued an RFP for a commodities manager. It is Fund, Indianapolis seeking long-only active and enhanced index managers. Proposals are due by July 18. Milwaukee City Employees 5,200 - Global Various Mercer The scheme plans to invest up to 20% of assets in alternative Retirement System investments including hedge funds, private equity, infrastructure and commodities.

For further information on iisearches’ daily search leads and searchable database of mandates awarded and lost since 1995, please visit iisearches.com or contact Keith Arends at 212 224 3533 or [email protected].

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Alternative Investment News www.totalalternatives.com July 14, 2008

Mandate Scoreboard Powered by: iisearches.com The table below shows new allocation commitments gained by alternative managers year-to-date through July 9. The 2007 column denotes last year’s ranking. Wins represent the number of new mandates the firm has won this year.

2008 Tally Week of July 7 Wins Rank 2007 Firms Hired Wins Total* Client Asset Type Amount* 1 J.C. Flowers & Co. 1 4000 2 GLG Partners 2 2974 3 TPG Capital 6 2100 4 34 PIMCO 8 1325 5 131 BridgePoint Capital 6 1075 6 99 Credit Suisse 7 1025 7 15 Bridgewater Associates 2 900 8 63 Advent International 9 897 9 110 Barclays Global Investors 6 827 10 5 8 801 Iowa Public Employees Retirement System Hedge funds 300 11 3 CVC Capital Partners 7 776 12 Stone Harbor Investment Partners 1 650 13 6 Carlyle Group 6 636 14 FountainVest 2 600 15 23 Texas Pacific Group 3 580 16 165 Alinda Capital Partners 4 560 17 2 550 18 80 JPMorgan Asset Management 3 547 Iowa Public Employees Retirement System Hedge funds 300 19 Riverstone/Carlyle 2 530 20 Capital Guardian Trust Company 1 500 332 Deutsche Asset Management 1 500 111 Mellon Capital Management 1 500 23 57 Baring Asset Management 4 496 24 Madison Dearborn Partners 7 480 Los Angeles County Employees’ Retirement Association (LACERA) Private equity 75 25 Jennison Associates 1 450 T. Rowe Price 1 450 27 13 Avenue Capital Management 3 449 28 First Reserve Corporation 2 440 29 57 Grove Street Advisors 1 400 30 261 Lazard Asset Management 2 354 31 Franklin Templeton Investments 1 350 32 Smith Breeden Associates 1 311 33 Fortress Investment Group 1 300 44 FrontPoint Partners 1 300 22 Oak Hill Capital Partners 1 300 211 Industry Fund Services 1 300 37 49 Wayzata Investment Partners 3 295 Indiana Public Employees’ Retirement Fund Private equity 30 38 CDH Investments 1 291 1 291 40 142 Babcock & Brown 4 271 41 80 Schroder Investment Management 3 270 42 4 260 43 36 Partners Group 2 260 44 Onex Corp. 3 250 45 Tenaska Capital Management 4 240 46 89 Macquarie Infrastructure Group 4 235 47 Gresham Investment Management 2 235 48 Actis 2 230 148 Sankaty Advisors 2 230 Selene Investment Partners 2 230 51 26 WL Ross & Co. 1 225 52 Apollo Investment Corporation 4 215 53 125 Nordic Capital 2 210 54 The Banc Funds Company 2 200 97 The Jordan Company 2 200 State Street Global Advisors 2 200 TCW/Crescent Mezzanine 2 200 58 Barlow Partners 1 200 HSBC Private Equity 1 200 Invesco Private Capital 1 200 50 Mariner Partners 1 200 Noble Environmental Power 1 200 63 ABN AMRO Asset Management 1 196 64 77 AXA Rosenberg Investment Management 1 190 65 208 Quantum Energy Partners 3 180 66 19 BlackRock 6 179 67 RCG Longview 1 175 68 AnaCap Financial Partners 1 165 69 27 3 160 70 43 Lexington Partners 2 160

12 ©Institutional Investor News 2008. Reproduction requires publisher’s prior permission. AIN071408 10/7/08 18:19 Page 13

July 14, 2008 www.totalalternatives.com Alternative Investment News

Mandate Scoreboard (cont’d) 2008 Tally Week of July 7 Wins Rank 2007 Firms Hired Wins Total* Client Asset Type Amount*

71 Evergreen Pacific Partners 2 150 72 Emerald Infrastructure Development Fund 1 150 Huntsman Gay Capital Partners 1 150 JPMorgan Private Equity Fund Services 1 150 Landmark Partners 1 150 Versa Capital Management 1 150 77 “Angelo, Gordon & Company” 3 145 78 349 Siguler Guff & Co. 7 141 79 Macquarie Bank 1 140 80 162 Henderson Global Investors 1 139 81 Private National Mortgage Acceptance Company 1 130 82 ABRY Partners 3 125 83 “Welsh, Carson, Anderson & Stowe” 2 125 84 Apollo Alternative Assets 1 125 85 349 Yucaipa American Funds 2 120 86 Harris Alternatives Investment Mgt 2 118 87 149 Vista Equity Partners 3 115 88 AP Alternative Assets 2 100 90 Farallon Capital Management 2 100 105 HarbourVest Partners 2 100 224 Marathon Asset Management 2 100 106 Pacific Alternative Asset Mgt Co. 2 100 93 Aisling Capital 1 100 48 1 100 AvalonBay Communities 1 100 Capstone Asset Management Co. 1 100 Evnine-Vaughan Associates 1 100 Fillmore Capital Partners 1 100 78 Green Equity Advisors 1 100 Highland Capital Management 1 100 JLL Partners 1 100 Knight Vinke Asset Management 1 100 LP Capital Advisors 1 100 Pershing Square Capital Management 1 100 Strategic Capital Management 1 100 Treesdale Partners 1 100 Varde Partners 1 100 WLR Recovery Fund 1 100 109 72 Abbott Capital Management 3 95 110 284 Starwood Capital Group 2 95 Teachers’ Retirement System of Louisiana Private equity 75 111 Great Hill Partners 3 90 8 Lehman Brothers 3 90 113 Sun Mountain Capital 1 90 114 284 ARCH Venture Partners 1 86 Celtic House 1 86 Kearny Venture Partners 1 86 VantagePoint Venture Partners 1 86 Ventures West 1 86 Walden International 1 86 120 Longitude Capital Management 4 85 121 Towerbrook Capital Partners 2 85 Indiana Public Employees’ Retirement Fund Private equity 35 122 NuVista Energy 1 84 Ontario Teachers’ Pension Plan Board Energy 84 123 Hutton Collins & Company 1 78 124 89 Macquarie Funds Management 3 76 125 51 TCW Group 3 75 126 318 Horsley Bridge Partners 2 75 127 178 American Securities Capital 1 75 72 BLUM Capital Partners 1 75 Caspian Capital Partners 1 75 Catterton Partners 1 75 Crow Holdings 1 75 Ironbound Capital Management 1 75 133 Lindsay Goldberg & Bessemer 2 95 134 40 PAI Management 1 75 135 HgCapital 2 70 136 Southwest Funding 1 69 137 71 UBS Global Asset Management 1 68 EACM Advisors 1 68 139 64 Natural Gas Partners 2 65 140 Aristeia International 2 63 Philadelphia Public Employees’ Retirement System Hedge funds 13 141 Aldus Equity Partners 2 60 46 2 60

For a complete listing of the Mandate Scoreboard, please visit www.alternatives.com

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July 14, 2008 www.totalalternatives.com Alternative Investment News

EX-FORTRESS MD NONPROFIT TO (continued from page 1) (continued from page 1) markets will also suffer, said Medd, adding that the downturn involve Bulldog, though it has led Goldstein to hold off on will provide plenty of opportunities for his special situations taking any action against the SEC himself. “This allows me to strategy. “The advantage for me is that, when it really hits the fan kind of cheerlead from the sidelines,” he said. this year, there will be a lot of companies that fundamentally Goldstein is engaged in a dispute with Massachusetts’ have to change,” he said. “I love pain and misery because it Secretary of the Commonwealth, William Galvin, over whether means change.” restrictions on the distribution of hedge fund information via Medd declined to name any of the 20-25 companies held by Web sites contravene the first amendment. Recently Galvin filed the fund. A typical investment will last from six months to three a motion to dismiss Goldstein’s counterclaim that Galvin doesn’t years. In addition to resources, telecoms and property, Medd has have personal jurisdiction over the matter. Goldstein has opposed begun to scrutinize Asian banks. the motion and the court has yet to rule. Family and friends are seeding the fund through the end of Terry O’Malley, partner at Fried, Frank, Harris, Shriver & July and in August he will begin approaching institutional Jacobson, said that if the case is won on first amendment investors. By year’s end, he hopes to raise $50 million. grounds then individual states will have to abide by the ruling. Medd managed Fortress’s global macro strategy until leaving However, if the SEC merely rethinks its position and issues a the $37 billion-plus firm in November. He was previously head new ruling, the state governments could still insist on of Asia research at Deephaven Capital Management in Hong password protection under the guise of fraud protection. The Kong, and before that, he was an executive director at group could potentially still pursue its suit in order to get a Goldman Sachs. definitive ruling. “I think this economy is the scariest I’ve seen in my working Goldstein won an earlier fight with the SEC, overturning a career,” Medd said. “I would hate to be in any other business apart 2004 rule that required hedge fund managers to register as from the one I’m in. I can profit from the pain.” investment advisers. —Suzy Kenly —Sarah Ilene Klein

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JANUARY 2004 VOL. V, NO. 1 GATE SLAMS ON Fro MIL TITLE FIRM ntPoint Shuts Down LENNIUM INVESTORS Quant Fund Some investors lo oking to get out of an of FrontPoint Partner last q fshore fund s has for the first uarter run by multi-billi time liquidated o on dollar hedge fund f ne of its funds. The Millennium Inte irm Greenwich, C rnational Managemen onn.-based hedge fund were t found they juggernau stuck. That’s because t has shut down t following a guilty plea Qua he former senio by a ntitative Equity Strategies (Q r trader at the Millenniu ES) fund. F m International See und, the fund’s redemp story, page 19 tion limits were reached,

ADDRESS (continued on pa At Press Time ge 25) Ex-Ran ger Manager Readies Fund LONGHO 2 RNS TO PLOW INTO ALTS U.S The University of Te . Searches xas System’s $11.5 billion seeking to endowment funds are Ispat Inland Considers M add roughly $575 mill ezz. Search 10 ion in new hedge fund i Albuquerqu year. The funds, whi nvestments this e School Weighs Funds 1 ch are managed by the U 2 Investme niversity of Texas nt Management Compa Eur ny (UTIMCO), currently opean Searches over 20% of their asset have a little s allocated to hedge fund CITY/STATE POSTAL CODE/ZIP COUNTRY French Insurer Seeks Hed Bob Boldt a 25% alloc s, and the goal is to ha ge Funds 16 ation, said Bob Boldt, cio ve Health Cha . The school is leaning rity Makes Foray 1 investing in absolute towards 6 return funds over other hedge fund styles, Boldt U.S. Manager New s (continued on page 4 Former Caxt ) on Bond Trader Returns 19 Amaranth Unveils Changes FARALLON FO 20 LLOWS LONE PINE’S LE ON HIGH AD European Manager News -WATER MARKS Quadriga Readies Farallon Capital M Fund 22 anagement, the San Fran TEL FAX E-MAIL Steyer, i cisco-based hedge fund s the latest hedge fund m behemoth run by Tom News From O anager to propose chang ther Ports provisions. As first repo es to its high-water mark Telstra rted on AIN’s Web site, To Tap Managers the firm in www.iialternatives.com, th 25 line with a growing num e move would put b ber of funds adopting c De y Tiger cub Lone Pine C hanges first proposed las partments apital that allow hedge fu t spring even when their nd managers to earn per Market Focus funds are under water. formance fees 6 Farallon wants the abilit Search & Hi y to earn a reduced re Directory 18 (continued on page 26) COPYRIGHT NOTICE: No part of this be publication may copied, photocopied or du plicated in any form or by KLM T any means without Instit O WEIGH utional Investor’s prior wr FUNDS O consent. Copyi itten F FUNDS Options for payment: ng of this publication is in The €8 violation of the billion KLM Federal Copyright Law (1 Pensioenfond 7 USC 101 et seq.). Violat s, the Amstelvee may be subject ors pensio n-based to criminal penalties as w n plan for pilots for su ell as liability , crew members bstantial monetary damag and ground sta es, including statutory KLM Royal ff of damages up to $100,000 Dutch Airlines, per infringement, costs an may make its fi attorney’s fees. d rst foray into Copyright 2004 Institution hedge funds of Inc. Al al Investor, funds this year. Fo l rights reserved. ns Lute, cio of Blue S Bill me Check enclosed (please make check payable to Institutional Investor News) Group, the money ky For informatio managem n regarding individual sub ent subsidiary o plea scription rates, P f KLM se contact Joe Mattiello ensionenfonds, at (212) 224-3457. said he plans to reco Fo mmend a 2-5% r information regarding gr hedge fun allocation to oup subscription rates ds of funds at a bo and electronic licenses, p ard meeting in lease contact Dan Lalor a April. (212) 224-3045. t I am paying by credit card: Visa Amex Mastercard (continued on page 26) Check www.iialternatives.com during the week for brea king news and updates.

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Alternative Investment News www.totalalternatives.com July 14, 2008

HARCOURT UNVEILS and turnaround companies, including high-yield bonds, secured bank loans and mezzanine loans. It will invest in (continued from page 1) 15-18 managers primarily in the U.S. and Europe. bond portfolio, expected in the next couple of months. Grünig The fund’s uniqueness has already attracted investors. was unsure whether or not this sets a precedent for approval by “Many are intrigued by the simplicity of the product,” Narciso other European authorities, but observed that Swiss regulation is said. UBP is in talks with high-net-worth individuals, pensions generally more relaxed than elsewhere. and insurance companies in Europe, Asia, and the Middle The ongoing banking crisis has created more ABL East, and will begin approaching a similar investor base in the opportunities, as hedge funds are stepping in to provide loans U.S. later this year. where banks are limited by tighter regulation and their weakened Shoaib Khan will manage the hedge fund portion of the balance sheets, said Grünig. The Luxembourg-registered offering SquareInvest fund, with Narciso overseeing the private equity is designed to appeal to more conservative institutional investors portion. “The idea is to offer something unique and different such as pension funds. The 15 underlying managers will not be than anything else on the market,” Narciso said. “I haven’t allowed to use derivatives and shorts, and the use of leverage is seen anybody doing this.” —Suzy Kenly limited to 10%. The fund is targeting annualised returns of LIBOR +2.5%, with 2.5% annualised volatility. The fund was launched on May 1 alongside Swiss Quote Of The Week pension fund consultant IST Investmentstiftung für “I love pain and misery because it means change.” —Alexander Personalvorsorge, and seeded with $20 million from IST’s Medd, founder of Bucephalus Capital Management, on the benefits clients. IST manages about CHF6.5 billion and Harcourt of managing a special situations fund in turbulent market conditions will draw on its client base to grow the fund. If it gets (see story, page 1). regulatory approval then it could grow to a couple of hundred million by year’s end, said Grünig. —Harriet Agnew One Year Ago In Alternative Investment News Tuckerbrook Alternative Investments rolled out its first ‘short UBP PREPS alpha’ fee structure, allowing investors to make concentrated (continued from page 1) allocations to managers’ short books. [The firm has since found there are strong distressed funds, both in the hedge fund world itself in a legal dispute with Managing Member Sumanta and the private equity world. By combining the two, we’re Banerjee over the control of two of its funds giving investors exposure to distressed funds across the (totalalternatives.com, April 30). Co-Founder Jay Yoder resigned spectrum.” UBP’s Geneva UBP Pension Fund will seed from the firm in May, apparently after a disagreement with Co- SquareInvest with an unspecified amount of money for its Founder John Hassett (totalalternatives.com, May 16).] August launch. The fund will have a capacity of $500 million. Narciso declined to specify the amount the pension fund will seed the fund with, or comment on the pension fund’s assets. For More Benefits Visit Our Web Site In its first year, the SquareInvest fund will invest 80% of its money in hedge funds to provide the fund with ample • Real time search alerts and breaking news on liquidity, Narciso told AIN. The remaining 20% will be held the alternative investment arena in cash. The fund will then allocate the cash to private equity funds, after which it will begin reducing the number of hedge • Email alert services for earlier delivery of information funds in its portfolio. Eventually it will invest entirely in in the weekly newsletter private equity funds. “The hedge funds will focus more on the more liquid types of trading, and we’ll rely on the private • Access to a virtual archive of past issues equity funds to give us exposure to the more illiquid • Critical web links to related sites to give you all the investment opportunities,” Thorsen said. “The beauty is we information you need on alternative investments can take advantage of both,” Narciso added. In its first three years, the fund will allocate to structured Go online and take advantage of web access to AIN. credit hedge funds, stressed and distressed funds, direct To set up your subscriber password, please contact us at lending strategies and rescue financing funds. Its private [email protected] or at 1-800-715-9195. equity allocation will focus on funds investing in distressed

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