Perry Capital | Richard Perry | Hedge Fund Notes

Perry Capital Management

Perry Capital Management | Hedge Fund Notes


The following piece on Perry Capital Management is being published as part of our daily effort to track hedge funds in the industry. To review other hedge fund research notes please see our Hedge Fund Tracker Tool.

Resource #1: (2.3.09) Perry Capital became the latest hedge fund firm that was reported to be cutting its performance fees in an effort to make up for a losing year.

The New York-based firm is said to be offering investors in its flagship $8.3 billion fund a cut in performance fee to 10% from the standard 20%, according to a Dow Jones report. source

Resource #2: Another big-name hedge fund is taking it on the chin. Perry Capital has told its investors that it lost 6.13% in the third quarter and is down 9.32% for the year through September.

In a letter to investors last month, the $11 billion firm said it was disappointed with its recent performance, particularly since it has been reducing its overall equity exposure and building liquidity for over 12 months in anticipation of a global credit crisis.

"Given our concerns about the macro environment, we entered September with the least amount of directional market exposure we have had in the last few years," it said. "Our cash balances also increased significantly, rising from 26% at the end of August to 31% by the end of September, one of the highest levels the firm has ever held."

Until the last few days of September, Perry said its performance held up relatively well. However, the massive deleveraging that resulted from the failure of some of the world’s largest financial firms, the unprecedented government intervention in the capital markets, and the forced selling from banks and hedge funds cost the firm "meaningfully." Source

Resource #3: Richard Perry, the 53-year-old founder of Perry Capital, built his name in the world of merger arbitrage. So it struck more than a few people as odd recently when Ted Martin, head of Perry Capital’s risk-arbitrage efforts, left the firm along with a senior trader in the group.

It seems Martin and his trader were caught up in a changing tide as the hedge fund refocuses its business away from equities and into credit, particularly distressed debt. It’s a remarkable move for Richard Perry, who founded his firm in 1988 after making his name as an equity arbitrager at Goldman Sachs. source

Resource #4: Perry Capital could be sued by the Securities and Exchange Commission over a strategy that allowed the $10 billion hedge fund firm to influence the outcome of a merger without risking investment losses, the Wall Street Journal reported on Wednesday.

John Heine, a spokesman for the SEC, declined to comment and a phone message left at Perry's New York office wasn't immediately returned Wednesday afternoon.

Perry was a big shareholder in King Pharmaceuticals Inc. (KG)when rival Mylan Laboratories (MYL)offered to buy the drug maker in 2004. To vote for the deal, Perry bought almost 10% of Mylan shares, the WSJ said. source

Resource #5: Perry Capital, which runs $11 billion in assets, is another likely candidate, according to investment banking and hedge fund sources. While the fund once played its cards close to the vest, founder Richard Perry has recently been involved in several high-profile deals - backing Hollywood moguls Harvey and Bob Weinstein in their new movie studio and helping finance the takeover of English soccer club Manchester United by Tampa Bay Buccaneers owner Malcolm Glazer.

Perry's wife, Lisa, a fashion designer, is also a prominent Democratic Party donor who has hosted fundraising events for Hillary Clinton at the couple's Sutton Place pad and Sag Harbor house. (Calls to Perry Capital were not returned.) source

Resource #6: Even Richard Perry's Perry Capital isn't immune from stepping in investment dog poo every once in awhile. This year his firm is on its way to being the first year around 20 years where it might actually lose money. And with that, the firm is tightening its belt with pink slips going out. According to the NY Post:

His flagship fund Perry Partners International recorded a third-quarter loss of 6.13 percent, bringing his year-to-date performance down 9.32 percent, according to people familiar with the matter. source

Resource #7: Another big-name hedge fund is taking it on the chin. Perry Capital has told its investors that it lost 6.13% in the third quarter and is down 9.32% for the year through September.

In a letter to investors last month, the $11 billion firm said it was disappointed with its recent performance, particularly since it has been reducing its overall equity exposure and building liquidity for over 12 months in anticipation of a global credit crisis. source

Resource #8: Richard Perry received a BS from the University of University of Pennsylvania, and earned an MBA from New York University's Stern School of Business. Like Dan Och and Eddie Lampert, Richard Perry worked in the Risk Arbitage department at Goldman Sachs. Perry co-founded Perry Capital in 1988. He achieved a return of over 12% for 2007. source


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