New York Hedge Fund Launch: The Long/Short Stanphyl Fund

HedegCo News -  New York-based limited liability company Stanphyl Capital GP, LLC (Stanphyl) has launched a long/short equity hedge fund.


The new hedge fund, Stanphyl Capital Partners, LP., launched earlier this month out of NYC. Managing member Mark Spiegel reported the current AUM at $2M.

The Strategy
– Stanphyl runs a highly concentrated (three to ten “best ideas”) long-short equity strategy
– The long positions consist primarily– but not exclusively-- of underfollowed microcap stocks
– The short positions consist of individual stocks and index and “macro” ETFs
– Investment decisions are fundamentally-based (both top-down and bottom-up), with technical analysis occasionally used to optimize entry and exit points
– There are over 8000 publicly-traded U.S. companies with market caps of under $500 million.
- The managing member believes that “outsized” gains can be made in these stocks due to the minimal attention paid to them by large institutional investors, while by using ETFs to establish well-timed index and “macro” positions, hedges (and often outright gains) can be created on the short side with minimal risk of being “squeezed”
– Using modest leverage, the strategy has generated a 26.7% gross annualized return since January 1, 2005 for the managing member’s personal portfolio

Spiegel is the managing member of Stanphyl Capital GP, LLC and is a NY-based equity investor. From late 2003 through early 2009 he was an investment banker (most recently as a Principal with Piper Jaffray & Co.) financing microcap public companies via private placement (“PIPE” and “Registered Direct”) transactions sized from $5 million to $100 million in companies with market caps of $50 million to $500 million. Prior to becoming an investment banker, Mark spent a year “inside” (i.e., working for) a microcap Nasdaq tech company.

Some Hedge Fund Highlights
• Volatility:  Due to their reduced liquidity, microcap stocks can be quite volatile on a short-term basis, and this volatility is often compounded by the portfolio’s “best ideas” concentration and typical hold period of six months to two years. Thus, on a monthly basis the NAV of the portfolio can move around quite a bit.
• Investor Concentration Limitations:  While Spiegel keeps the majority of his liquid net worth in Stanphyl, due to its high degree of concentration he limits each investor to placing no more than 10% of his or her liquid net worth in the fund.
• Occasional Very High Levels of Cash: Depending upon the availability of attractive investment opportunities (or lack thereof), there are times when Stanphyl may have much or all of its assets in cash. Spiegel is quite comfortable with the concept of “patiently waiting for the right pitch at which to take a swing.”

Dyment Joins UBS as Global Head of Hedge Fund Distribution

Global wealth management giant UBS has appointed John Dyment,  president and founder of $9 billion Greenwich hedge fund, Shumway Capital Partners, as UBS's Global Head of Hedge Fund Distribution.

Based in New York, Dyment will be responsible for the management and development of UBS’s strategically important hedge fund franchise, with global functional responsibility for sales, capital introduction and business consultancy services to the hedge fund community within Global Prime Services and have responsibility for coordinating all hedge fund sales activities across the Investment Bank’s FICC and Equity Divisions.

"The hedge fund business presents a significant opportunity for our global investment banking franchise." Yassine Bouhara, UBS Co-Head of Global Equities, said, "Dyment comes to UBS with deep knowledge and experience, and we are pleased that he will lead our hedge fund distribution business globally. We are equally pleased to demonstrate continued investment in our senior team in the Americas, which is of critical importance to our global business."

Prior to the Shumway hedge fund, Dyment was Managing Director at Deutsche Bank, where he managed the Global Hedge Fund Capital Group. Prior to Deutsche Bank, Dyment worked for Goldman Sachs, building the firm’s capital introduction and consulting services businesses.

DnB NOR Global Energy Hedge Fund Launch

Stockholm based hedge fund manager, Carlson Fund, has launched a Global Energy fund. The fund invests in traditional energy companies globally, emerging markets included. Prime investment targets are oil and gas companies as well as in the service industry.

Lill Evanger Aafos and Aliya Orazalina will be managing the fund. They have 28 years of combined investment experience.

Ms. Aafos came to DnB NOR in 2008 to head up the global energy team. Previously, she was responsible for all energy investments at Norway’s state pension fund.

The new fund was launched on April 29. Carlson is part of the DnB NOR Asset Management group, which has a long history of managing energy stocks as part of client mandates and global portfolios.

The case for energy
To sustain global growth, the world has a need for energy that goes beyond the sources currently available.
Consumption in emerging markets has a long way to go to catch up with that of the West: The average Chinese citizen will have to quadruple his energy consumption to reach the consumption level of Americans. Indians must increase consumption more than tenfold.

Discovery of new oil does not keep up with increases in consumption, and new finds are in places where extraction is difficult. This leads to higher prices on oil and increased activity in the oil sector.

Recent set-backs for the nuclear energy sector will make the world more dependent on other sources of energy. Germany decided this week to decommission all nuclear reactors by 2022. Alternative energies are part of the mix, but traditional sources will still make up the lion’s share of energy supply over the foreseeable future.

Hedge Fund Industry Awards

HedgeCo News - Sadis and Goldberg was named the best law firm in the United States at the Hedgeweek USA Awards. The awards were for excellence among hedge fund managers and service providers for the U.S. industry's best performers and their ability to demonstrate consistency and depth of expertise against the backdrop of a more complex investment climate.

The awards were decided by the votes of Hedgeweek's 20,000 U.S. based subscribers, which include institutional and high net worth investors, fund administrators, prime brokers, custodians, advisers and other industry professionals. Ron S. Geffner, Partner and Head of the Financial Services Group, stated that, "the Hedgeweek USA Law Awards rank amongst the top global awards and we are honored to be recognized by our industry in this category."

Sadis & Goldberg is one of New York's leading law firms, providing legal counsel to several hundred advisers, broker-dealers and commodity pool operators that sponsor, manage and advise hedge funds, private equity funds, venture capital funds and separately managed accounts.

Preet Bharara on the Galleon Hedge Fund Trial

The June 27, 2011, issue of The New Yorker, on page 42, “A Dirty Business”, George Packer, writes about the biggest insider-trading case in history, and has an exclusive interview with Preet Bharara, the United States Attorney for the Southern District of New York, whose office pursued the investigation.

When Bharara took office, in 2009, he made it clear that he would go after Wall Street greed, and the Galleon case helps to illustrate the broader culture of the financial world, in which, “over the past decade, cheating and self-dealing became a principal way to succeed,” Packer writes.

But some Wall Street observers have called the Galleon case—which included thousands of taped phone calls by the government and more than two hundred and thirty subpoenas for phone numbers by the S.E.C.—a sideshow.

The case centers around Raj Rajaratnam, the head of Galleon, a multibillion-dollar hedge fund, and Anil Kumar, a former senior executive with the consulting firm McKinsey, who, in 2003, secretly agreed to be an outside consultant to Rajaratnam. In seducing Kumar, Packer writes, Rajaratnam “made a valuable addition to the network that he had built up over the years.”

Initially, Kumar believed that he’d be passing information to Rajaratnam legally, but it wasn’t long before he realized that Rajaratnam wanted tips that he could convert into profitable stock trades, and Kumar began breaking both McKinsey’s confidentiality rules and the securities laws that forbid such exchanges. When Kumar was arrested and subsequently handcuffed, Packer writes, “He fainted, hitting his head against a wall. He had to be treated at a local hospital before he could be brought in for booking.” Later that day, Rajaratnam’s wife sent a text message to Kumar’s wife, which read, “I’m sorry.”
Read the full review on HedgeCo.

Morningstar: Merrant Outperforms With High Sharpe Ratio and Low Standard Deviation

Stockholm (HedgeFonder.nu) - Leading Swedish hedge fund investor, Merrant Alpha Select, has continued to outperform its peers, according to global hedge fund research provider Morningstar.

Merrant Alpha Select has the second highest Sharpe ratio and the third lowest standard deviation of all the 2700 Fund of Hedge Funds (FoHFs)on Morningstar Direct´s global database.

"The (fund) has an unbroken track-record of positive returns and has proven it's ability to generate substantial alpha and explore market inefficiencies regardless of the directional movement of global equity and bond markets." Managers Ulf Sedig & Rolf Hagekrans said in a press release regarding Morningstar's rating.

The FoHF performed +0,42% in April, with a Sharpe ratio of 4,64 and has shown 100% positive months and 87% positive weeks since inception. The FoHF targets an annual performance of 8-14% and a standard deviation of 2-4%.

Survey: Co-domiciled Hedge Funds On The Rise

HedgeCo News - A survey report released today by RBC Dexia and KPMG predicts that hedge fund managers will continue to create EU-domiciled hedge funds to complement their Cayman Islands or other offshore offerings, but that the QIFs and SIFs were gaining popularity versus the UCITS framework.

The survey challenges the notion that onshore domiciles could rival the supremacy of the Cayman Islands amongst hedge fund managers. Only a quarter (24%) of hedge fund managers said that they had already brought offshore funds onshore. Of those, more than half (55%) said they opted for co-domiciliation by creating onshore clone funds to complement their existing Cayman or other offshore offerings. Less than 5% of those with onshore funds said they had decided to transfer the domicile of their funds to the EU outright. The trend for hedge funds to create more EU regulated funds seems set to continue however, with 27% of respondents stating that they are considering doing so.

Jean-Michel Loehr, Chief of Industry and Government Relations at RBC Dexia, commented: "The survey shows that EU fund domiciles are becoming more and more relevant to the hedge fund community, and that they respond to a real need amongst clients for more liquidity and transparency. Co-domiciliation allows hedge fund managers to cater to investors that are not authorised to buy into Cayman funds with onshore products while retaining their existing offshore strategies."

The prominence of co-domiciliation could be short lived however due to uncertainty over the AIFM Directive: most hedge fund managers considering domiciling their funds in the EU said they would do so before the implementation of the AIFM Directive in 2013, and fully 69% of them said they were considering doing so by transferring the domicile of their existing funds to the EU.

The research also shows that the UCITS framework, which some respondents said was an effective marketing tool to stem outflows during the financial crisis, has lost some of its appeal amongst hedge fund managers. Indeed, whereas those polled were just as likely to set up UCITS funds as other regulated structures, such as Irish QIFs and Luxembourg SIFs, in the past, 77% of those considering creating an onshore structure in the future now say they would prefer QIFs and SIFs instead.

Tom Brown, KPMG Head of Investment Management for the EMEA Region, said: "The market is starting to realise that even though 90% of alternative strategies can be replicated under UCITS, specialised structures such as SIFs and QIFs offer more flexible liquidity and transparency rules for hedge funds. UCITS still offers very robust protection for investors, but clearly the wholesale shift into alternative UCITS some had been predicting has not taken place."

Ethical Hedge Fund Sees Positive Results in 2011

Stockholm (HedgeFonder.nu) - Long/short European equity fund CB Hedge is up +2.27 for April 2011 and up +4.1 in the last 12 months.

The hedge fund is run by CB Asset Management, a Swedish investment company with high ethical guidelines regarding alcohol and tobacco, weapons, child labour, extortion and corruption.

With SEB as primebroker, CB Hedge is a long/short European equities fund with the objective of generating an absolute return of 10-15%. To provide a systematic protection during a decline CB Hedge takes a short position in a European index. Usually, the turnover of the portfolio is very low.

Launched in 2007, the hedge fund is biased towards market neutrality, always net long but never more than 20% of the fund's AuM.Investors can buy shares on a daily basis and sell shares on a monthly basis. The performance fee is 20% of the return and there is a 1% redemption fee. There is currently no minimum required investment or subscription fee.

CB Asset Management was established in 1994 upon licensing from Finansinspektionen (FI), the Swedish Financial Supervisory Authority (Swedish FSA), for management of equity portfolios. The company manages three funds: CB Hedge, European Quality Fund and Save Earth Fund. The funds are managed by Carl Bernadotte, Marcus Grimfors and Alexander Jansson.

Alexis Åkesson
Editor at HedgeFonder.nu

www.hedgefonder.nuhttp://hedgefonder.nu/