Bronson Point Partners
Former SAC, Pequot Employees Launch New Fund
Yesterday, we noted the rise in start-ups (outpacing liquidations) and one such launch illustrates the changes in the hedge fund industry as two ex-employees at top funds start a new fund on their own. Two hedge fund professionals from different hedge fund firms plan to combine their experiences to open a new fund, Bronson Point Partners.
Larry Foley worked as a senior portfolio manager at SAC from 1994 until last year and Paul Farrell was a member of Pequot's executive committee and co-portfolio manager of the firm's Scout Fund Group. The two are working together to open Bronson Point Partners next month and are working to attract investors at a time when limited partners seem more hesitant to invest with new funds. To address this problem, Foley and Farrell have committed $25 million of their own money to show that their skin is in the game.
This is a familiar story this year as more startups are emerging in the wake of a very rough year for hedge funds. It may be a good time as institutional investors like endowments and pension funds are trying to capitalize on hedge funds' success this year in order to recoup losses during the financial crisis. In the past, proven hedge fund workers such as Foley and Farrell would rarely encounter difficulties raising funds but in a shaky economy investors' preferences tend to shift to those hedge funds will an extensive track record and who they have invested with previously.
To get into Bronson Point, investors need to put down $1 million, an average figure for most small hedge funds. It will charge a 2 percent annual management fee plus an incentive fee of 17 percent to 20 percent, depending on how long investors agree to leave their money with the new firm.
Bronson Point in its brochure promises to use an "opportunistic approach combining fundamental research and active portfolio management." The team, which also includes ex-SAC trader Jonathan Marcus, said retailer Bed Bath & Beyond (BBBY.O) and regional sporting goods store Hibbett Sports (HIBB.O) are among the fund's core holdings.
Foley and Farrell are among a growing number of investment managers who are trying to set up their own firms at a time pension funds and endowments are eager to put money into alternative assets like hedge funds to try and recoup losses during the financial crisis. Former Goldman Sachs star Mark Carhart is also planning to launch his own firm next year. Source
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Tags: Bronson Point Partners, SAC, Scout Fund Group, Pequot, hedge fund startups, launches, 2009