York Capital Management
York Capital | Hedge Fund Notes
The following piece on York 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.About York Capital: It has often been observed that change is a constant in human affairs and indeed in the world at large. This is especially so in the business world. Driven by
what Adam Smith termed the “invisible hand,” mankind’s tendency to progress
creates an environment of corporate Darwinism, where companies that do not
constantly act to improve their businesses will perish. This dynamic, rooted in
human nature itself, is the foundation of event investing.
York Capital Management was founded in 1991 with a simple goal: to provide
consistent, superior risk-adjusted investment returns relatively independent of
the overall market. In the years since, the firm has pursued this goal through a
combination of focused research and investment selection, and disciplined risk
management. With offices located in New York and London, York manages over 7 billion
dollars worth of assets on behalf of institutions, endowments, foundations, fund
of funds, wealthy individuals and their families.
About James Dinan, CEO of York Capital: Jamie is the Chief Executive Officer and Founder of York Capital Management. He is a Managing Member of the Firm and is a member of the firm’s Senior Management Committee. He has responsibility for the implementation and execution of York’s investment process as well as its overall business strategy. He is the co-portfolio manager for York’s multi-strategy funds, and along with Dan Schwartz, oversees the firm’s other portfolio managers’ investment activities.
Prior to forming York Capital Management in 1991, Jamie was a general partner at Kellner, DiLeo & Co., a New York Stock Exchange member firm specializing in risk arbitrage. Jamie was also a member of the Investment Banking Group of Donaldson, Lufkin & Jenrette. Jamie received his B.S. in Economics, summa cum laude, from the Wharton School, University of Pennsylvania and his M.B.A. from Harvard Business School.
He is Chairman of the Board of Directors of both the Museum of the City of New York and Publicolor, a not-for-profit organization benefiting New York City public school children. source
Resource #2: Dinan grew up in Worcester, MA. He graduated with a degree in economics from the University of Pennsylvania and received his MBA from Harvard.
He started his career working as an investment banker at Donaldson, Lufkin & Jenrette and in later in merger arbitrage at Kellner DiLeo.
He lost entire life savings on "Black Monday" in 1987, but bounced back founding York Capital Management in 1991 with $3.6 million. York Capital specializes in merger and aquisition transactions, distressed and restructuring opportunities and special situations equity investing. Dinan achieved returns of over 20% for 2007. source
Resource #3: Jamie Dinan was at Wharton Undergrad from '77-'81. He went to HBS after working for two years. Summer between 1st and 2nd year at HBS, did some work in merger and risk arb, and ultimately chose money management, while his peers went into i-banking, because he "liked it."
Made 500G in '86, but was wiped out in '87, with only 5G left to his name. '88 did well, lost in '89 on with United Airlines. Again lost money in 1990. In Fall of '91, started own firm, York Capital Management. (He chose the name because he lived on York Avenue in New York; didn't name the firm Dinan Capital because if he blew up right away, wanted nothing to do with that name!) Pointed out, fairly obviously, that is is "easy to get money when you don't want it, but hard to get it when you need it." Started out in '91 with 3 million under management, and has pretty much doubled his assets under management every year since; he has 3.9 billion as of right now.
A little on York: York Capital Management � Net Annualized ROR Since Inception = 17.9% In York Select, which allows for double the volatility, 24% compound for over 8 years; this fund does not use stop-loss, but buys on dips. A little on the Industry: Hedge funds are now the "quickest way to get rich, like the dot-coms of the late 90s." ("But don't try to get rich quick; getting rich requires patience.") But you need to continually re-invent yourself; you have to want to do it. In order to do well in this business you "have to love markets, as opposed to simply wanting to get rich. You have to be good at something." You also need to keep changing and re-inventing yourself. Long Term Capital Management blew up in '98 because of leverage and market neutrality. "Market Neutral or Relative Value is a lousy business | even John Merriwether blew up!" ("If you screw-up, stay on Wall Street; everyone gets a 2nd, 3rd, 4th chance |return 20%, 20%, 20%, then blow up! |get new investors." You need to specialize, need to have an edge. Long/Short model is a good stock picker's game. Steve Mandel of Lone Pine ($2B under management) is the BEST in this area of specialization. York is event-driven research-driven shop "where are the inefficiencies?" Tactical Trading Strategies are the most profitable. source
Resource #4: Jamie Dinan is back, making the Alpha list for the second time in seven years with returns of 20 to 25 percent in 2007 on four of his eight hedge funds at $14.1 billion York Capital, which he founded in 1991. The New York–based Dinan, 48, specializes in risk arbitrage, distressed and restructured debt, and events like company breakups and proxy fights. At year-end the five biggest holdings in his $4 billion York multistrategy funds were AK Steel Corp., Canadian phone company BCE, software company Cognos, FNX Mining Co. and MasterCard. Dinan, who is known for buying stakes in companies on the cheap, paid $21 million in 2004 for the lavish Manhattan duplex apartment of former Tyco International CEO Dennis Koz-lowski, which the company had been trying to sell for nearly a year. Dinan was legendary for pulling all-nighters in his previous life at investment bank Donaldson, Lufkin & Jenrette. source
Resource #5: The Renoir, the Monet and the infamous $6,000 shower curtain had been carted off by the time Jamie Dinan arrived at the former Fifth Avenue home of L. Dennis Kozlowski, the fallen ex-boss of Tyco International Ltd.
It was October 2004, and for Dinan, it was payback time. His hedge fund firm, York Capital Management LLC, had lost millions on Tyco in 2002, the year Kozlowski was indicted for looting the company. The executive's luxurious four-bedroom duplex, bought and decorated with Tyco money, had come to symbolize the executive greed and financial trickery of the Enron era.
Dinan offered less than $21 million for the co-op, about $6 million less than Tyco's initial asking price. York Capital employees refer to his low-ball purchase as the ``Revenge of the Tyco Trade'' -- retribution for the Kozlowski fiasco. source
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