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DECEMBER 4, 2013 Carlyle Nears Deal With Risk-Parity Manager Carlyle Group is close to buying a quantitative fund shop that employs a risk- 6 INFLOWS/OUTFLOWS BY STRATEGY parity model, a move that would allow it to compete for mandates alongside AQR Capital and . 2 MLP Specialist Readies for Launch The giant has agreed to pay an undisclosed sum forOklo Financial, Jaipal Tuttle. Peter 2 Taubman Heir Markets Fund a New York firm founded by physicist He is best known as one of Muller’s early hires at Process Driven Trading, a former unit that was 3 New Path for Buyer of Nonperformers at the forefront of the quant movement. Oklo would be the fourth single-manager business Carlyle has 3 Global-Macro Vehicle on Launch Pad acquired in the past two years, but the purchase would be unusual in several 4 Equity Researcher Preps Hedge Fund respects. First, while the other three — Claren Road Asset Management, Emerging Sovereign Group and Vermillion Asset Management — all retained their own identi- 4 Europe-Focused Fund Rakes in Capital ties, Oklo likely will adopt the Carlyle name. That in itself could be a huge advantage See CARLYLE on Page 8 4 Flock to Park Presidio 5 Multiple Administrators In Vogue Wells to Launch Full-Service Prime Brokerage 6 Horton Point Grows Seeding Business Wells Fargo is starting a second prime-brokerage group, this one aimed at larger 9 Ex-AlphaMetrix Duo Enlists Managers clients. The new unit, set to launch during the second quarter of next year, would operate 11 LATEST LAUNCHES separately from an existing introducing-broker business that Wells established with its 2012 purchase of Merlin Securities — but would exist under the same prime- services umbrella. It would be aimed at fund operators with at least $100 million under management. THE GRAPEVINE The Merlin business caters to smaller firms, with a focus on those that employ it as their only prime broker. The group now under development would offer clearing, Portfolio manager Mark Monroe left New custody, securities-lending and margin-financing services to shops that farm out York fund operator ADAR Investment those functions to multiple . last month to start his own hedge fund With $1.3 trillion of assets, part of Wells’ pitch will be that it makes an ideal shop, TMG Asset Management. The new partner for managers that have been seeking to spread out exposures to various operation, also in New York, takes long See WELLS on Page 10 and positions in and bonds with a focus on issuers in the media, Star Recruit Suggests Growth for Paloma telecommunications and entertainment industries. Monroe also traded stocks Donald Sussman’s Paloma Partners has lured Jason Huemer away from his post and credit products at ADAR, which was as president of Visium Asset Management. managing $415 million of regulatory Huemer is set to leave Visium at yearend, at which point he will start in Paloma’s assets at the start of March. Greenwich, Conn., headquarters as a managing director in charge of marketing. He also is expected to play a major business-strategy role involving the creation of new Another manager with a focus on products, although nothing is imminent on that front. healthcare stocks has leftBalyasny Asset Huemer’s recruitment pairs an executive with a history of leading large-scale Management. Matt Jenkin parted ways growth initiatives with a firm that, while widely known and highly respected, with the Chicago firm in November, on manages only one hedge fund. Huemer presided over a major expansion of the heels of the September dismissal of Visium and before that played key roles in similar efforts at firms includingSAC a separate team of healthcare specialists. Capital and York Capital. Paloma, meanwhile, keeps all of its $2.1 billion in its There’s no word on Jenkin’s destination. Paloma Funds vehicle. Healthcare-related investments have That entity, which Sussman started trading in 1981, employs a multi-strategy See GRAPEVINE on Back Page See PALOMA on Page 5 December 4, 2013 Hedge Fund 2 CoreLogic_ABAlert 2013_final 9/4/13 6:58 PM Page 1 ALERT MLP Specialist Readies for Launch An analyst specializing in master limited partnerships is setting up a hedge fund. Cameron Addington, working from his newly formed Cen- tralis Capital of New York, is targeting Jan. 2 for the launch of Centralis Event Driven Energy Fund. The vehicle would buy stakes in small energy-infrastructure companies that are struc- tured as master limited partnerships. Shares of MLPs trade on public exchanges, but are treated as limited partnerships for tax purposes. Addington already has raised an undisclosed sum from several wealthy individuals. Among them is former employer Emil Henry, a former U.S. Treasury official who currently runs an energy-focused private equity firm calledTiger Infrastruc- ture Partners. Henry started his firm with backing fromJulian Robertson’s . Addington spent nearly two years as an analyst at Tiger Infrastructure before leaving in August to start his own busi- ness. Before Tiger Infrastructure, he spent four years at Tortoise Capital, a Leakwood, Kan., firm that runs some $13 billion in energy-related investments, including MLPs. By focusing on small-cap MLPs, Addington believes he can be more nimble than other vehicles that target the sector. On “This the flip side, such shares tend to be more volatile because they are less liquid. Centralis anticipates holding long positions for 12-24 months, and shorts for 6-12 months.  time is Taubman Heir Markets Hedge Fund Talisman Group Investments, whose debut fund is up 30%-

plus after less than a year of trading, will soon begin soliciting

outside capital. different.”M The New York firm, led by an heir to the Taubman real estate fortune, Jason Taubman Kalisman, this month hired Josephine Weiss as head of business development. Weiss, who Is it? most recently was director of marketing and rela- tions at Serengeti Asset Management, is responsible for leading Or has someone just uttered the four most Talisman’s fund-raising efforts, with a focus on family offices, dangerous words in the mortgage business? endowments and foundations. Know for sure with CoreLogic data and solutions. Talisman invests in the debt and equity of real estate-related The insight you need for today’s critical decisions: companies. Its Talisman Realty Capital , which risk mitigation, asset management, collateral launched Jan. 1, was up 33.5% as of Nov. 30, versus a 25.9% valuations, MSRs and REO strategies. Data as big gain for the S&P 500 Index and a 2.2% increase for the MSCI as the capital markets: that’s CoreLogic. U.S. REIT Index. The fund currently manages about $100 million, mostly on behalf of Kalisman’s family and friends. Before opening To learn more, go to corelogic.com/bigdata his own shop, Kalisman co-founded OTK Associates, a New or call 415.536.6300 York firm that holds a controlling stake in theMorgans Hotel Group. OTK is controlled by members of the Taubman and Olshan families. Prior to OTK, Kalisman headed the special-situations group NYSE: CLGX ©2013 CoreLogic. All rights reserved. at GEM Realty Capital of Chicago, and earlier worked for Gold- man Sachs both in New York and London. He is the grandson of Alfred Taubman, founder of mall operator Taubman Centers.  December 4, 2013 Hedge Fund 3 ALERT New Path for Buyer of Nonperformers ers. “The banks would prefer to be bought out of a loan at a major discount than write it down themselves,” Newbery said. A buyer of distressed mortgages that transformed from a The firm focuses on loans with face values of around not-for-profit organization into a hedge fund manager is again $100,000 on homes in low- and moderate-income neighbor- recasting itself as an operator of private equity vehicles, while hoods. It buys them from direct lenders as well as from other using the JOBS Act to expand its investor base. distressed-mortgage buyers that acquire the accounts in bulk American Homeowner Preservation, led by Jorge Newbery, but find them too inefficient to deal with. Sellers have included this week will close on $4.6 million of pledges to a fund called Banco Popular, , Five Mile Capital, Lakeside Capital, American Homeowner Preservation Series 2013C — the third in Magnetar Capital and Pimco. a series of closed-end “lockup” products that started launching Indeed, American Homeowner’s small-ball game proved earlier this year. At the same time, the firm will finish unwinding costly. Even after certain expenses were passed through, the its only hedge fund, a 2-year-old vehicle with $8 million that has efforts of its 15-person staff to restructure a large number of produced an average annual net return of about 14%. small loans ate up most of its 2% management fee and 20% of American Homeowner buys pools of defaulted small-balance returns. “It worked out well for investors, but it wasn’t that good mortgages from lenders at deep discounts and then seeks to for us,” said Newbery. recover its investments by offering debt relief to the underlying Hence, the shift to a private equity format. American Home- borrowers. It plans to follow up Preservation Series 2013C with owner Preservation Series 2013C, the largest of the series so a vehicle called 2013D that would aim to raise up to $10 million. far, will use its $4.6 million to assume the holdings of Ameri- After working with a few dozen backers over the past couple can Homeowner’s hedge fund: about 220 mortgages with an of years, the Chicago firm is now running advertisements on original face value of $22 million that are secured by property websites aimed at drawing numerous small, accredited inves- valued at $11.4 million. Preservation Series 2013D, meanwhile, tors. “I’d prefer to have 560 investors with $10,000 each than would buy its loans from outside parties. the 30-40 we usually go to that we have existing relationships In a typical refinancing, the company has paid 20 cents or with,” Newbery said. “That just builds for the future.” so on the dollar for a $100,000 loan on a house now worth Since its 2008 start, American Homeowner has raised and $50,000. It writes down the face value to $45,000 — cutting the deployed $25 million. With little competition in pursuing low- homeowner’s payments while more than doubling the value of end defaulted debt in low-income communities, Newbery the fund’s asset. The firm looks to exit the deal, usually within thinks he’ll be able to grow his business to the point where the five years, by helping the borrower get a new mortgage, often firm assembles closed-end funds monthly, with annual com- from a federal . mitments of $250 million to $300 million. A third of the time, American Homeowner is able to keep The private equity fund series has unusual terms, offering borrowers in their homes. In the other cases, the borrowers preferred — but capped — returns. A one-year share class agree to a short sale or deed-in-lieu of foreclosure, or they sim- offers a net profit of up to 9%, after certain expenses and a 2% ply walk away and the firm seeks a buyer for the house. management fee. Maximum net returns are 10.2% for a two- Newbery’s partners in the hedge fund — Steve Peterson, year class and 12% for a five-year class. Returns over those who previously ran a high-yield municipal bond portfolio for thresholds stay with American Homeowner, in part to cover Allstate Investments, and Paul Hawkinson, formerly of of costs that aren’t passed through. America and BMO Capital — departed recently, after Peterson Taking advantage of the JOBS Act, which took effect Sept. decided against taking a $75 million seed investment.  23, the firm began running banner ads in the past few weeks on Bankrate.com and Loopnet.com that lead prospective investors Global-Macro Vehicle on Launch Pad to its own website, ahpinvest.com. There, they can inspect the financial details of the offerings and of the houses targeted by The former principals of futures brokerage Empire Futures the latest fund. are starting a hedge fund business. American Homeowner set out in 2008 with the intention of The new firm, InterGlobal Asset Management of Manhattan aiding distressed homeowners in Akron, Ohio, with funding Beach, Calif., is offering a quantitative-macro vehicle dubbed from tax-exempt bonds. But it found banks unwilling to haggle Alphamega Diversified Fund. The firm raised an initial $500,000 over individual loans, and the planned $12.5 million of financ- on Oct. 31 — presumably “friends and family” money. ing was cancelled. The shop then became a for-profit entity and The operation is led by Empire foundersJason DiNozzi and tried matching up homeowners one-on-one with investors who Blake Piercy, who recently exited the Los Angeles brokerage, would provide refinancing. Out of 2,000 attempts, it managed and Vincent Enrico, who was a broker at Empire. to complete just 200 deals. Enrico will serve as portfolio manager of InterGlobal’s fund, It had more luck with the hedge fund. With two partners, which will mainly invest in large-cap U.S. equities, equity Newbery raised capital to buy pools of loans — and found that derivatives and U.S. federal and municipal bonds. The vehicle banks were much more willing to sell them at a loss to another will seek exposure to other asset classes via exchange-traded financial firm than to work out modifications with homeown- instruments.  December 4, 2013 Hedge Fund 4 ALERT Equity Researcher Preps Hedge Fund The fund was up 2.3% after four months of trading, including a 3.8% loss in August. The founder of -research firm Signal Investment Investors can access the fund via two share classes. The first Research will soon put theory into practice. carries a “soft” 12-month lockup and charges a standard 20% Stephen Davis, whose Norwalk, Conn., firm caters largely , on top of a 1.5% management fee. The other to hedge fund managers, has formed an affiliate called Signal share class charges a 17.5% performance fee in exchange for a Asset Management with plans to launch a long/short equity firm two-year lockup. It also charges a 1.5% management fee. fund in the first half. The vehicle, tentatively dubbed Signal The fund’s portfolio manager isVikram Kumar, who joined Optimized Market Fund, will deploy a full arsenal of analytical TT in 2008 and previously served as co-manager of the mid- tools, including fundamental, technical, macro and seasonal cap European-stock vehicle. screens. The firm, founded in 1988 by Tim Tacchi, runs about $9 “While any of the disciplines we use can stand on their own, billion overall. About $2 billion of the total resides in a series our work illustrates that by using them in combination we of equity and macro hedge funds, with the rest held in “high can identify a portfolio of equities with a higher probability of long only” accounts.  exceptional risk-adjusted returns,” the fund’s marketing mate- rials claim. Investors Flock to Park Presidio In drafting the fund’s strategy, Davis applied techniques he developed at Signal Investment Research to a basket of energy- Park Presidio Capital still hasn’t launched its debut fund, company stocks over an 11-month period starting in December but already the San Francisco startup is planning to limit the 2012. Stocks pegged as “strong buys” rose an average of 42.1% amount of capital it’s willing to accept. during that period, while those tagged with “strong sell” rec- The firm, whose fund is set to begin trading next month, ommendations fell 17.6% on average, according to the fund’s has been telling prospective investors that it will bar entry once pitchbook. the vehicle reaches $300 million of assets — a milestone it’s Davis, who founded his research firm in 2012, is chief invest- expected to reach in the first quarter. Raising that sum would ment officer of the asset-management unit, which is in White make Park Presidio one of the most successful launches among Plains, N.Y. He will manage the fund with assistance from a a bumper crop of fund shops in the Bay Area. colleague at Signal Investment Research: research chief Jim A move to cut off subscriptions would have the dual ben- Lewis, who previously worked at Citadel. He also plans to hire efit of allowing the manager to focus more on investing, while an unidentified technical analyst and a portfolio manager who nudging investors who have been sitting on the fence. also will hold the title of chief executive. The portfolio manager The keen investor interest reflects the pedigrees of found- will come on board in January. ers Lee Hicks and Jan Koerner, who previously were manag- Davis previously spent eight years as an associate portfolio ing directors at San Francisco fund giant . They manager at mutual fund shop Alpine Woods Capital of Purchase, were part of a Farallon team called the value equities group N.Y. Prior to that, he ran a research firm called SJ Davis Capital, that managed $3 billion. Koerner oversaw long/short equity and earlier worked at Cowen Asset Management.  investments in financial and business-services companies. It’s unclear what Hicks’ precise role was. Europe-Focused Fund Rakes in Capital The offshore Park Presidio Capital Partners fund and an onshore companion will take long and short positions in stocks Investors have been quick to embrace TT International’s lat- and commodities, employing a value-investing approach. est hedge fund offering. Investors will be allowed to withdraw up to 25% of their capital The vehicle, TT Long/Short Focus Fund, has swelled to more each quarter with notice of 60 days. than $125 million of assets since launching on July 1 with about The firm’s chief financial officer isAdam Horowitz, formerly $45 million. The strong demand isn’t surprising given the Lon- a partner at event-driven manager Hylas Capital of New York. don firm’s enviable track record investing in European equities Analyst Carter Malloy recently joined from Stephens.  for more than 20 years. Its TT Mid-Cap Europe Long/Short Fund, for example, was running a 14%-plus average annual return as of the first half of 2012. That fund, which launched in 2004, stopped accepting capital five years ago — a factor that Got a Message for the Hedge Fund Community? clearly has contributed to the fund-raising success of the newer Your advertisement in Hedge Fund Alert will get the word out to vehicle. hundreds of professionals who actively manage funds, invest Like its older cousin, TT Long/Short Focus Fund applies in them and provide services to the alternative-investment to invest in European companies with community. For more information, contact Mary Romano at 201-234-3968 or [email protected]. Or go to market capitalizations of less than €5 billion ($6.8 billion). But HFAlert.com and click on “Advertise.” it takes a more concentrated approach, with 35-45 positions at a time and an average holding period of up to 36 months. December 4, 2013 Hedge Fund 5 ALERT

Management, LMR Partners of London and the now-defunct Multiple Administrators In Vogue . Managers of hedge funds and other alternative-investment As for Huemer’s responsibilities, the scope of his work vehicles are almost as likely to employ multiple administrators appears to be broader than that of predecessor Philip Anker, as they are to use just one, according to operations consultant who left Paloma in July to become global head of distribution Convergence. at Insight Investment of London. While Anker held the title of An analysis that the Fairfield, Conn., firm provided to Hedge business-development chief, his job mainly involved market- Fund Alert found that 25% of hedge fund, private equity fund ing and investor relations. and real estate fund operators work with two or more admin- A layer down in the chain of command, investor-relations istrators. That’s closer than expected to the 30% who farm out head Andreas Bauer will report directly to Huemer. On the back-office functions to a single vendor. marketing front, Huemer’s efforts will no doubt involve high- The remaining 45% don’t use an administrator, with private lighting Paloma’s solid performance record. Paloma Funds equity and real estate firms more likely than hedge funds to gained 12% for the first 11 months of 2013, compared to a 0.7% handle those functions on their own. Still, it’s the number of rise in the HFRI Relative Value Index and a 6% gain in the HFRI managers using at least two administrators that stands out. Global Hedge Fund Index. The divvying up of administrative work in many cases can be Huemer worked as York Capital’s chief operating officer attributed to a desire among managers to work with firms that from 1999 to 2003, then stopped at Lynch and a few specialize in certain strategies. Some also are wary of relying other shops before latching on as head of marketing at SAC in too heavily on single vendors in general. 2005. By the time he left SAC in 2009, he had raised $6 billion But even with the trend leading to increased business oppor- for the now-troubled operation. tunities for administrators — who already have benefitted from Huemer subsequently spent about a year at global-macro growth in the hedge fund industry — Convergence believes shop Atlas Capital before landing at Visium, which at the time many eventually will have little choice but to combine with was running $1.6 billion through a single fund with a focus on rivals. “There are over 300 administrators serving the U.S. mar- healthcare-related investments. As of this June, the New York ket today, with 280 competing [for work from managers with less firm was running $4.7 billion through a mix of hedge funds than $1 billion of assets],” partner George Evans said. “This is not and a mutual fund that it launched earlier in the year.  a sustainable model and we suspect significant consolidation.” Convergence launched in April with an emphasis on offer- ing operations-focused data and advice to fund managers and administrators. As part of the push, it has populated a database with the operational and staffing details of 11,000 traditional Keep looking forward. and managers. Of that total, 3,500 run Hedge fund services driven by our core values. hedge funds, private equity funds or real estate vehicles. The hedge fund component spans 11 strategies, up from seven ini- tially. Convergence draws the information in part from regula- tory filings, the managers’ websites and news articles. The firm was founded by former Apollo Global Management chief financial officer Gene Donnelly, one-time Apollo Fund Group finance head John Phinney and Evans, who has headed business development for J.P. Morgan’s administration unit, as well as GlobeOp and the former Bisys. 

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Comprehensive Alternative Investment Product Solutions Portfolio & Fund Accounting Compliance Need to find the newest funds? Go to The Marketplace section Fund Administration Transparency & Risk Management Custody Services Treasury Services of HFAlert.com and click on “Latest Launches.” Investor Services Tax Support December 4, 2013 Hedge Fund 6 ALERT Horton Point Grows Seeding Business Horton Point is led by Dimitri Sogoloff. He launched the firm in 2006 as a proprietary-trading operation, then devel- Horton Point Capital, which seeds quantitative hedge funds, oped the emerging-manager business starting last year. is offering clients an expanding menu of options for investing Sogoloff previously was a co-founder ofAlexandra Invest- with the managers it backs. ment, a once-$2 billion fund shop that shut down during the Last month, the New York firm launched the first in a financial crisis. series of commingled vehicles offering pinpoint exposure to individual managers, with a level of transparency typically found only in separate accounts. The debut offering deploys Inflows/Outflows by Strategy capital to Tarpon Trading, an intra-day currency trader that received Horton Point’s backing in May. Tarpon’s founder, Last 12 Sept. Stephen Theall, Months Total has worked as a currency portfolio manager Hedge funds ($Mil.) ($Mil.) at blue-chip fund operators including Balyasny Asset Man- Asia/Pacific long/short equity $39.1 $1,949.0 agement, , Millennium Management and Bear market equity 0.5 135.5 Tudor Investment. In addition to the fund series, Horton Point runs a seeding China long/short equity 0.3 147.5 vehicle that launched early this year and is now fully invested -221.5 4,389.2 with seven managers. But more seed-capital vehicles are on Currency 7.7 4,058.1 the horizon, with plans to back a total of 20 managers over Debt arbitrage -100.7 10,724.8 time. -56.9 8,287.6 Other options open to investors are a managed-account Diversified arbitrage 37.7 3,680.5 program, through which clients can pick and choose the Emerging markets long-only equity -22.7 9,659.4 underlying managers, and a planned commingled vehicle Emerging markets long/short equity -62.8 8,488.5 that will provide broad exposure to Horton Point seeds. The Equity 230.1 5,896.4 firm expects to begin marketing the multi-manager fund next Europe long/short equity -10.0 10,701.1 year. Event driven 287.5 13,505.8 The varied offerings are designed to attract a range of Global long/short equity -267.5 12,211.8 investors — from sophisticated institutions that want to 645.1 59,583.1 retain a high degree of control to smaller investors willing Long-only debt 20.5 14,800.3 to leave allocation decisions to Horton Point. Regardless of Long-only equity -208.5 24,655.7 the option, Horton Point’s fees are similar to what investors Long-only other 163.0 5,164.8 would pay if they invested directly with the underlying man- Long/short debt -365.7 27,027.4 agers. In some cases, investors also can choose the amount of Merger arbitrage 9.5 1,115.8 they want to employ. Multistrategy -403.1 37,199.2 For instance, investors in the Tarpon vehicle could split Systematic futures -574.1 41,029.2 their capital between a share class that uses no leverage and U.S. long/short equity 345.4 30,766.5 another that borrows $9 for every $1 of equity. So an investor U.S. small cap long/short equity -0.4 6,559.4 that wants to use leverage equal to one-times equity capital Volatility 16.8 1,322.6 would put about 11% of its investment in the leveraged share TOTAL -490.9 343,059.4 class and the rest in the unleveraged share class. Horton Point’s model appears to be gaining traction at a time when most other hedge fund-seeding businesses have Net Flows for Industry ($Bil.) lost steam on the marketing front. In addition to offering seed 4 and acceleration capital, the firm plays a key role in market- 3 ing the managers it backs. So far, it has raised more than $100 2 million for those firms, with each now running between $5 1 million and $100 million. 0 Tarpon had just $25 million when Horton Point injected -1 acceleration capital into the Southport, Conn., manager. It -2 now has about $100 million under management. -3 Some of Horton Point’s other investments include global- -4 macro manager H Cube J, led by Yehezkel “Hezzie” Lamdan -5 in Tel Aviv; currency trader Olton Capital, run by Oliver Pat- Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep terson and Antonio Juste in London; and exchange-traded- 2012 2013 fund investor U-Stat, which is headed by Alex Kaganovich and Source: Morningstar Direct Fund Flows based in Horton Point’s offices in New York. Confidential? Not anymore.

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Ray Dalio and his colleagues for the firm’s iconic All Weather Carlyle ... From Page 1 program, is designed to deliver positive returns regardless of when it comes to raising capital. economic conditions. The idea is to apportion capital to mul- In the near term, however, Oklo would be by far the smallest tiple asset classes on a risk-weighted basis — so that a bond of Caryle’s hedge fund units. It currently runs just $100 million portfolio, for example, carries the same risk as a stock portfolio. through separate accounts. By contrast, Claren Road manages The approach is characterized by highly liquid securities and some $14 billion, while Emerging Sovereign Group has more moderate leverage. than $7 billion and Vermillion nearly $3 billion. Giant asset managers such as AQR, Bridgewater, GMO and Another difference: Carlyle wants to buy a 100% stake in Pimco have had increasing success marketing risk-parity vehi- Oklo. It owns just 55% of the other three firms. Just last week, cles to large plans and sovereign wealth funds. But however, Carlyle reached an agreement to buy fund-of-funds until now, the strategy has been largely unavailable to smaller operator Diversified Global Asset Management in a deal that investors. would give it full ownership of the firm. Carlyle’s interest in Oklo coincides with a broader effort It also appears that Carlyle wants to position Oklo to target by the $180 billion firm to broaden its client base. Earlier this wealthy individuals as well as retail investors, in addition to the year, for example, Carlyle dropped the minimum-investment institutional clients that are the focus of firms like Claren Road requirement for its buyout funds to just $50,000, from as much and Emerging Sovereign Group. Oklo’s initial offering likely as $20 million. The firm also has signaled an interest in target- will be a hedge fund seeded by some of its existing investors, ing non-accredited investors. Co-founder David Rubenstein, for as well as balance-sheet capital from Carlyle. But there also are example, has said he would like to manage money for 401(k) plans to adapt or some other tactical-asset-alloca- plans — a $3.6 trillion market largely untapped by alternative- tion strategy for a mutual fund offering. investment managers. Tuttle and his partner, Matthew Simsic, are shooting to Carlyle currently doesn’t offer a mutual fund. But in addi- launch both the hedge fund and mutual fund in the first quar- tion to Oklo’s plans, Vermillion has been laying the ground- ter. They have been scouting for programmers, researchers and work for an inflation-focused vehicle that would be packaged execution traders to support an expansion of the business. as a mutual fund. That product could be ready to launch in the Risk parity, an approach developed by Bridgewater founder first quarter. While working at Morgan Stanley’s Process Driven Trading unit in the 1990s, Tuttle was known as the operation’s “human S I K J F P I W D M K C G P trader,” because he could execute quantitative-driven transac- tions that couldn’t be completed automatically. He was featured C A H G O R Q F W H R J B S in a 2010 book called “The Quants,” byWall Street Journal R Q G D V A C W V T G S T P reporter Scott Patterson. Last year, Muller spun off his unit from Morgan Stanley to form a free-standing firm calledPDT H W J O V W F S F I B O X J Partners. Tuttle founded Oklo in 2003, two years after leaving Mor- W I H O F X J C I Q K W G W gan Stanley. In 2012, he hired Simsic as president of a new unit Q O P P O R T U N I T Y R A called Oklo Advisors with plans to launch a hedge fund dubbed Oklo Global Macro Fund. The effort was put on hold pending a K S J K R J W D D T J G F J deal with Carlyle. E P H T S Q F W E I R M O W Simsic, too, is a veteran quantitative trader. He has held portfolio-manager roles at firms includingGoldman Sachs’ Hull O M V G C P S O R O A J W I Trading, Millennium Partners, DRW Trading and Eladian Part- H P E X F W G M K W S K M Q ners.  W BRealT EstateI G Alert,J S Wthe CweeklyQ W D P S E AnewsletterE H EthatO deliversW G theJ latestS wordI W K on major transactions, market gossip Need Reprints of an Article? O M I X T S F K W P W R M P Want to show your clients and prospects an article or listing that and dealmakers’ secret strategies. mentions your company? We can reprint any article with a F V B M B E Q M T H S W J G customized layout under Hedge Fund Alert’s logo — an ideal Start your free trial at REAlert.com, or call 201-659-1700. addition to your marketing effort. Contact Mary Romano at M S R N I O V P J W D O S M 201-234-3968 or [email protected]. Information on reprinted articles is also available on HFAlert.com in the A W I K W P X A R H W K B S “Advertise” section. P O W S D W H W I W X S O H December 4, 2013 Hedge Fund 9 ALERT Ex-AlphaMetrix Duo Enlists Managers conference have signed up for the new event — and the expec- tation is that many more will follow. Several hundred managers The team that ran AlphaMetrix’s once-thriving conference had registered for the AlphaMetrix gathering before the firm business has quickly signed up more than 400 managers for a shocked the industry on Oct. 10 by announcing that its liabili- capital-introduction event designed to fill the void left by their ties “greatly exceeded” its liquid assets. former employer. The troubles stem from a separate business that offers inves- Working from their newly formed Context Summits, Mark tors access to managed-futures vehicles via separate accounts. Salameh and Geoff Marcus ultimately expect to draw more The firm has acknowledged that it failed to pay managers on its than 1,000 managers and investors to “Context Miami Sum- platform a total of $600,000 of management and performance mit 2014,” scheduled for Jan. 29-31 at the Fontainbleau Hotel fees they were owed. On Nov. 6, the CFTC filed a complaint in Miami Beach. That’s the same week and venue AlphaMe- alleging misappropriation of funds. trix had slotted for its “Miami 2014 Summit” before financial Salameh and Marcus initially attempted to buy the confer- troubles brought the Chicago firm to its knees and led theCFTC ence operation from AlphaMetrix. When that effort failed, they to file civil-fraud charges. AlphaMetrix continues to promote took steps to form their own business called HighLine Summits. its summit on its website, but industry sources expect the only But they subsequently entered a partnership with Context Capi- event that will take place at the Fontainbleau that week will be tal of Bala Cynwyd, Pa., to launch Context Summits. the replacement conference being organized by Context. Salameh and Marcus are hoping to use “Context Miami Salameh and Marcus have agreed to waive the $8,000 reg- Summit 2014” as a foundation from which to launch other istration fee for managers who previously had registered for cap-intro events covering a range of strategies. Many fund the AlphaMetrix gathering. “They are eating those registration managers and investors appreciated the conference model they fees, but you can look at it as the cost of doing business,” one developed at AlphaMetrix because it was light on panel discus- source said. sions and heavy on networking. Last year’s event drew 1,600 So far, several managers who registered for the AlphaMetrix managers and investors. 

CALENDAR CALENDAR

Main Events Dates Event Location Sponsor Information Jan. 27-29, 2014 Network 2014 Miami MFA www.managedfunds.org March 3-4 Alpha Hedge East Palm Beach Gdns., Fla. IMN www.imn.org March 19 Symposium 2014 New York HF Intelligence www.hedgefundintelligence.com April 29-30 EuroHedge Summit Paris HF Intelligence www.hedgefundintelligence.com May 13-16 SALT 2014 Las Vegas SkyBridge Capital www.saltconference.com June 18 Forum 2014 Chicago MFA www.managedfunds.org June 23-26 Fund Forum International 2014 Monaco ICBI www.fundforuminternational.com June 24-26 GAIM International 2014 Monaco ICBI www.icbi-gaim.com

Events in US Dates Event Location Sponsor Information Dec. 8-10 Alternative Investing Summit Laguna Niguel, Calif. Opal www.opalgroup.net Dec. 8-10 Global Indexing & ETFs Scottsdale, Ariz. IMN www.imn.org Dec. 8-10 Private Summit Las Vegas Marcus Evans www.me-uk.com Dec. 9 Waters USA New York Incisive Media www.incisive-events.com Dec. 9 Cap Intro: Emerging Markets Alternative Investing New York Catalyst Financial catalystforum.com Dec. 9 Holiday Party New York Hedge Fund Assn. www.thehfa.com Dec. 11 Global Hedge Fund Symposium Dallas Ernst & Young www.ey.com Jan. 7-9, 2014 Public Funds Summit Scottsdale, Ariz. Opal www.opalgroup.net Jan. 14-15 Transactions Washington ACI www.americanconference.com Jan. 15 Global Hedge Fund Symposium Los Angeles Ernst & Young www.ey.com Jan. 15 Specialty Finance Summit 2014 New York iGlobal Forum www.iglobalforum.com Jan. 23-24 Research & Due Diligence for Wealth Mgmt. Platforms New York FRA www.frallc.com Jan. 29-31 Miami Summit 2014 Miami Context Summits www.contextsummits.com To view the complete conference calendar, visit The Marketplace section of HFAlert.com

December 4, 2013 Hedge Fund 10 ALERT

Francisco-based Merlin, which came at an estimated cost of Wells ... From Page 1 $280 million and gave the bank an instant roster of some 500 prime brokers. The bank’s huge balance sheet also promises to clients. Why start a group that would operate alongside that make it a formidable competitor to the industry’s more estab- business, as opposed to expanding its existing footprint? lished players, including , J.P. Morgan and Mor- Merlin’s focus on smaller firms with single prime-broker gan Stanley. relationships was based in part on its strategy of addressing Wells has been developing its plan for a year, and has 75 a lack of capital reserves by steering clearing and settlement staffers supporting the initiative on its technology, operations, business to bigger banks including J.P. Morgan and Goldman. compliance and financing teams. The San Francisco bank also At the same time, Merlin’s technology played a key role in its intends to hire some marketing professionals as it gets closer to services by spitting out customized risk, performance and rolling out the business. investor reports for its clients. That said, Wells is taking a measured approach. The plan is While those programs are well regarded, some of their to start discussing the push with fund operators early next year, reporting capabilities are unnecessary or difficult to use for with the idea of having a few initial managers on board for the clients that deal with multiple prime brokers — shops whose launch of the new service. needs tend less toward introducing brokers and more toward By the end of next year, the bank wants to be working with full-service banks. Often, larger managers outsource risk- and about two dozen firms — starting with equity managers that investor-reporting duties to administrators, in part because employ limited leverage. In the following years, it would reach they don’t want to reveal details of their prime-brokerage rela- out to operators across all strategies while offering them a full tionships to competing vendors. And even where Wells does suite of services: trade execution, international market access, see larger funds taking advantage of Merlin’s technology, it is capital introduction, business consulting, futures clearing, cash exploring ways to offer reporting services via a yet-to-be-estab- trading, derivatives and synthetic financing. “I don’t want to lished bureau outside prime services. oversell the platform. I really want to have a partnership with Wells’ purchase of Merlin vaulted the institution to 14th our clients,” prime-services head Eamon McCooey said. “Our place in Hedge Fund Alert’s 2012 ranking of prime brokers, with goal is to build products and services that address the needs of 96 clients large enough to register with the SEC. Goldman, by our client base.” comparison, came in first with 1,777 clients. Wells stunned other prime brokers with its purchase of San Merlin now goes by the name Wells Fargo Prime Services, as will the new unit. Prime services comes under Dan Thomas’ client-trade-services team within Wells’ capital-markets and investment-banking unit. Thomas’ group also encompasses areas focused on , futures and foreign currencies, along with a hedge fund administration operation that the bank gained with its 2011 purchase of LaCrosse Global Fund Services. McCooey, who arrived in December 2012 from Deutsche Bank, was charged with gaining market share for Merlin and helping build an infrastructure that eventually would serve larger managers. Meanwhile, Merlin co-founder Steve Vermut left Wells in January with his son, Aaron Vermut, and sales execu- tive Ron Suber to join online lending company Prosper.com. But the Merlin team appears to have experienced few departures at the lower levels. 

Track Past and Present Fund Start-Ups

You can keep tabs on Wall Streeters who are setting out on their own by monitoring “Latest Launches,” which you can find in The Marketplace section of HFAlert.com. The listing is chock full of details about recent launches of hedge funds and funds of funds, as well as information on vehicles established in the last several years. December 4, 2013 Hedge Fund 11 ALERT LATEST LAUNCHES LATEST LAUNCHES

Equity at Portfolio managers, Launch Fund Management company Strategy Service providers Launch (Mil.) Centralis Event Driven Energy Cameron Addington Event driven (master Prime broker: BTIG Jan. 2 Fund Centralis Capital, limited partnerships) Law firm: Bingham McCutchen Domicile: U.S. New York Auditor: Rothstein Kass See Page 2 212-882-1095 Administrator: NAV Consulting

Foxhaven Capital Fund Michael Pausic Equity: long/short Prime brokers: Bank of America, Nov. 1 512.4 Domicile: U.S. and Cayman Foxhaven Capital, Goldman Sachs, Morgan Stanley Islands Charlottesville, Va. 434-326-5300

Signal Optimized Market Fund Stephen Davis Equity: long/short Law firm: Marino Partners 3Q Domicile: U.S. Signal Asset Management, See Page 4 White Plains, N.Y. 917-348-4919

To view all past Latest Launches entries, visit The Subscribers section of HFAlert.com

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THE GRAPEVINE clients through hedge funds and sepa- operation. Caspian was formed in 2010 rate accounts employing global-macro by a 15-person team that broke off from ... From Page 1 and emerging-market strategies, among Mariner Investment, led by portfo- other tactics. The firm originally was lio managers Adam Cohen and David lagged the performance of other hold- established in 2007 as Cabezon Capital. Corleto. It was running $4.1 billion of ings within Balyasny’s multi-strategy regulatory assets at the end of last year. Atlas Global Investments fund for a few Seattle fund-of-funds manager Silver years now. Creek Capital will shut down its London Mark Jennings recently left his post as office in January — a move that will see deputy manager at investment firmLOM Portfolio manager Todd Dashefsky has portfolio manager Gideon Nieuwoudt Group for a job with Morgan Stanley’s split off fromCitadel unit Surveyor leave the $5.9 billion firm. There’s no wealth-management business in New Capital. There’s no word on his plans. word on the plans of Nieuwoudt, who York. At Bermuda-based LOM, Jennings Dashefsky had signed on with New holds the title of managing director. Silver raised capital and managed accounts York-based Surveyor in 2012, appar- Creek opened its London outpost in 2008. for LOM Securities, one of several units ently receiving almost $500 million to that run a combined $750 million via invest in technology stocks. Before that, Investor-relations specialist Michael Gro- hedge funds and other investments. He he worked at Och-Ziff Capital. ver leftBlack River Asset Management in had joined LOM in 2009. October, after 10 years at theCargill unit. Cabezon Investment is seeking a senior Grover now works in a similar capacity North Carolina Retirement has hired marketing professional to lead its first at EverStream Energy Capital, a private an alternative-investment portfolio full-scale capital-raising push. The cam- equity firm in Excelsior, Minn. manager to focus on vehicles includ- paign would expand upon what until ing hedge funds. Sondra Vitols started now has been a less-formal marketing Debt-fund operator Caspian Capital at the $80 billion pension system in approach for the San Francisco firm, has hired a marketing professional November. She previously worked at the with the timing of the push reflecting away from Moneda Asset Manage- $27 billion South Carolina Retirement, the fact that the shop recently achieved ment. Alejandra Arguello started at New where her duties encompassed fixed- track records of at least two years in York-based Caspian last month. She had income investments. Vitols’ resume each of its investment strategies. Cabe- been on board at Moneda since 2010, also includes stints at Clark University’s zon runs $500 million for family offices, holding the title of director of market- endowment, D.E. Shaw and McKinsey wealthy individuals and institutional ing in the U.S. for the Santiago, Chile, & Co.

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