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wwHw.absoleuteredturn.nget e Magaiszsue 1i anpril 2e003 THE MAGAZINE FOR THE US aHEDGbE FUNsD COoMMUlNIuTY t ereturn Moore on winning the talent game PAGE 30 Hedge funds under siege How much more regulation will there be in the US? PAGE 38 The start-up business Over $27 billion raised by new funds in 2002 and the pace isn’t slowing PAGE 44 Which index is best? S& P, Zurich, CSFB Tremont and HFRX analyzed PAGE 34 CONTRIBUTORS Published by has been following hedge funds and HedgeFund Intelligence Ltd Mike Peltz other alternative investments since the early 1990s Douglas House – 3rd floor when he was a writer for Institutional Investor 16–18 Douglas Street magazine. In July 1996, Mike joined Worth magazine, London SW1P 4PB where he has continued to write about hedge funds as Website : www.hedgefundintelligence.com part of his broader financial and business coverage. He Email : [email protected] is currently Executive Editor of Worth and pens a Telephone : +44 (0) 20 7233 8585 monthly column on the markets called Streetwise. Fax : +44 (0) 20 7630 7948 New York office: 20th Floor, 104 Fifth Avenue, New York, NY 10011 Telephone: +1 212 352 8713 is the editor of InvestHedge , a sister Niki Natarajan Fax: +1 212 924 0240 publication of Absolute Return , and has nearly 10 years experience as a financial journalist, specialising mainly Managing editor: Iain Jenkins in investment management. Niki previously worked for [email protected] Financial News, where she launched the hedge fund US Editor: Peter Gallo and securities finance coverage. Before that, she [email protected] worked for Institutional Investor as launch editor of US Correspondent: Katrina Dean Allen Global Fund News and editor of Foreign Exchange [email protected] Letter. Contributors: Barry Cohen, Stephanie Hoppe, Niki Natarajan Neil Wilson, Robert Maharajh, Mike Peltz, Paul Taylor has been a business journalist for more Data and Research Manager: Lisa Ahmed Paul Taylor [email protected] than 25 years and is currently based in New York. He Production Editor: Melissa Hayes writes on business and technology subjects for a [email protected] number of publications including the Financial Times and Nasdaq International magazine. He has also written Marketing Manager: Joanna Douglas extensively for leading financial publications about the [email protected] capital markets and financial services industry. Subscriptions Executive: Penny Bowler [email protected] Circulation and Accounts Manager: Jan Brown is a senior correspondent on [email protected] Stephanie Hoppe EuroHedge , a sister publication of Absolute Return . Prior Group Publisher: John Willis to that she was the editor of Financial Products, a weekly [email protected] newsletter on structured derivatives products, and an assistant editor on Futures and Options Week. She has Subscription enquiries also written for a variety of other publications including London: +44 (0)20 7901 1912 Handelsblatt and The Times Educational Supplement. Advertising Enquiries: +44 (0)20 7901 1918 [email protected] Copyright:HedgeFund Intelligence Ltd. All rights reserved. is the editor of EuroHedge and has over Reproduction or transmission of this magazine, by either electronic Neil Wilson or mechanical means, including photocopying, recording or any 15 years experience as a financial journalist, mainly information storage and retrieval systems, prohibited without prior written permission of the publisher. specialising in derivatives and alternative investments. For information on reprints and back isssues, please email Neil was formerly European editor of MARHedge, [email protected] or call +44 (0)20 7901 1912 editor of Futures & Options Week, editor of Futures Subscribers must agree to the Terms and Conditions of Absolute Return as posted on the website www.AbsoluteReturn.net before and Options World and assistant editor of The Banker. subscribing. No statement in this magazine is to be construed as He has also worked for Risk Magazine and contributed an invitation to invest in hedge funds. HedgeFund Intelligence reserves the right to refuse subscriptions. to a variety of other publications such as the Financial ISSN Number: 1740-4282 Times and The Economist. 4 ABSOLUTE RETURN APRIL 2003 EDITORIAL New magazine for a new era elcome to the first issue of Absolute news stories and each month we will be breaking WReturn, the magazine for the hedge fund news that you need to know. professional. Our launch comes at an interesting Our profiles of some of the leading players in time for the hedge fund community. Regulators the industry will give a valuable glimpse into the seem to be snapping at the heels of the industry. workings of some of the biggest and best firms. The press is full of negative stories about blow- And we will be bringing insights into the ups, falling assets and poor performance. performance of the hedge fund industry though Yet new funds are starting daily and the big our unique performance reports and our US institutions are showing real signs of allocating hedge fund database, which will expand over time. vast sums of money to hedge funds. In a move to address concerns about private More than ever, it would seem, there is a need placement rules, all our US subscribers have to be for a magazine to make sense of the seemingly ‘accredited investors’ and must agree not to conflicting currents swirling around the industry. circulate the magazine to non-accredited people. Our goal is to provide intelligent and We hope you enjoy the publication and agree provocative analysis of the real stories behind the that it maintains the high editorial standards that headlines. We aim to cut through the noise and we have set with our other publications, get to the heart of the issues facing the industry EuroHedge , AsiaHedge and InvestHedge . in considered way. This will not be at the expense of important Iain Jenkins, managing editor APRIL 2003 ABSOLUTE RETURN 5 CONTENTS Contents ................ MAIN FEATURES 17 Bowman is back - investors aren’t happy 30-32 How Louis Bacon is wooing trading talent The technology guru and one time manager of a Moore Capital, the $5 billion-plus group, is $5 billion fund is part of a trend to shut down breaking the mould in its battle to build its bench funds after a period of poor returns and quickly of traders in a strategy that sets new standards of open again in a new guise. flexibility for other hedge fund group’s trying to build sustainable operations. 18-19 Lazard discovers the power of the little guy After the shock departure of William von 38-42 Facing up to a new world of regulation Mueffling, the spotlight has now turned on the Attacks seem to be raining down on the US hedge involvement of mutual fund groups in hedge fund industry from all sides and some form of funds and has prompted serious questions about regulation now seems inevitable. But how bad will whether they are capable of holding on to top it be? hedge fund talent. 6 ABSOLUTE RETURN APRIL 2003 CONTENTS CTA funds. Performance NEWS 43 GNueeisl tW coilusomnn explains why a reports on top equity funds. little regulation along the lines 8 Intelligence Big news stories from around of the European model may be 50 US league tables the industry good for US managers. Monthly performance data on over 500 funds with February’s numbers. 13 PWehoopl eis moving where INVESTORS 58 Indices and global round up 22 FWunhdys a arned e sqturaittye gfuiens ds not Absolute Return Index along 14 ISnt tohreie nse twhs at made the working? And could the with indices for European, headlines biggest hedge fund strategy be Asian funds and global fund of about to fall from favour in the funds. same way that macro fell out of 26 New funds Up coming launches favour in the late-90s. RESEARCH 34 Funds of funds in drag? 46 PWrohdautc pt raonddu vcetnsd aorre n newews and 25 IGnestniteurtailo nMaol btouryse ris’ pgluaiydie ng safe Are the latest wave of hedge what the vendors are doing with its pensioners money and fund indices nothing but a picking the safe brand name marketing gimmick designed funds for its initial foray. for institutional investors that VIEWPOINT don’t know any better? 5 Editorial PERFORMANCE 44 NAe lwo ofkun idn tsou rtvheey size of the start 21 Mairkkee tP ceoltmz mrevnet als Steve 48 PAeltrafo arnmda nocthe er convertible up business in the US suggests Cohen’s buy and hold secret funds reach new highs. Tudor that it may be bigger than and wonders why he has BVI and Campbell keep racing people thought and broken his own trading rules. ahead along other macro and increasingly polarized. APRIL 2003 ABSOLUTE RETURN 7 INTELLIGENCE Blocking tactics by Citadel and Amaranth plan by Citadel and Amaranth, two of the leading multi-strategy arbitrage groups, to Aactively discourage investors from backing managers that leave to start on their own, came to light with the recent launch of Polygon by Citadel alumnus, Reade Griffith. Citadel investors who contacted the Chicago- based firm about investing with Polygon, which is one of the big launches in Europe this year, were politely referred to the shareholder agreement that stops them from investing in break-away funds. Such was Polygon’s concern about the issue that their investor presentation warned that, if they ISnomvee gsootdo nerwss steaemkse to rboe oan dth eo huortiz oon fo rt teecchnh ology funds after a rocky 12 months in which close to $10 billion invested with the fund, they risked being thrown flowed out of the sector and a number of high-profile funds out of any Citadel fund in which they were closed their doors. John Hurley, formerly at Bowman invested. Capital, looks set to raise an initial $300 million for his Meanwhile, Amaranth has indicated to investors Cavalry fund.
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