global hedge fund leadership report

Your opinions…

Your perspectives…

RSM McGladrey presents Opinions of the Hedge Fund Community

Your opinions are reflected in a comprehensive survey of the hedge fund community. Portfolio managers and executives of U.S. hedge funds comment on the current economic environment, investment opportunities and future challenges. For a look at the state of the industry, your views on the future of the American economy and concerns about the Obama Financial Regulatory Plan call your McGladrey financial services professional or email [email protected] for a copy of the survey. The McGladrey survey is available electronically at www.rsmmcgladrey.com/hedgefund.

©2009 RSM McGladrey, Inc. All rights reserved. RSM McGladrey, Inc. and McGladrey & Pullen LLP are two separate and independent legal entities. They operate in an alternative practice structure that enables them to work together to service clients’ business needs. RSM McGladrey Inc. and McGladrey & Pullen LLP are member fi rms of RSM International.

HF_LeadershipReport_09 7/24/09 9:32 AM

Bleed Ads Template.indd 1Bleed Ads Template.indd 1 5/13/09 5:33:54 PM5/13/09 5:33:54 PM

JULY 2009 GLOBAL HEDGE FUND LEADERSHIP REPORT 3

www.emii.com

BUSINESSPUBLISHINGTRACEY REDMONDBusiness Publisher (212) [email protected]

KEITH YUBusiness Publishing Manager

VINCENT YESENOSKYSenior Operations Manager

DAVID SILVASenior Fulfillment Manager

REPRINTS DEWEY PALMIERIReprints & Premission Manager (212) [email protected]

CORPORATE GARY MUELLER Chairman & CEO

STEVEN KURTZDirector of Finance & Operations

ROBERT TONCHUK Director/Central Operations & Fulfillment

EDITORIAL JOANNA RANDELL

Editor of Business Publishing(212)224-3526

[email protected]

PRODUCTIONDANY PEÑA Art Director

BRIAN GOLDMAN Advertising Production Manager

ADVERTISINGJONATHAN WRIGHT

Advertising Director(212) 224-3566

[email protected]

ADRIENNE BILLSAssociate Publisher

(212) [email protected]

PAT BERTUCCIAssociate Publisher

(212) [email protected]

From the publishers of:

EDITOR’S NOTE Welcome to Institutional Investor News’ 2009 Global Hedge

Fund Leadership Report. Never has the sharing of intellectual

capital and effective, honest communication between the

industry’s stakeholders been more important than it is right

now.This supplement set out to tap some of the industry’s great

minds on today’s pressing issues and bring their thoughts and

best-practices to our readers. I think it delivers.

Our report opens with exclusive interviews with John Paulson, Timothy Barrett,

Noam Gottesman, Andrew Dodd and Jaeson Dubrovay.The variety of answers these

industry leaders give to the same questions illustrate their different perspectives on,

and approaches to some of the most important challenges facing the industry today.

Be sure to visit www.emii.com/hfleadership to see my complete interviews.

Jeremy T. Todd of Pershing LLC. follows-up with a thought provoking article on

emerging industry trends stemming from the financial crisis, including the growth of

tri-party agreements as a means of reducing counterparty risk.

Our report closes with profiles of 2009’s Rising Stars of Hedge Funds. Nominated

by their clients, peers and mentors, these individuals have been selected by the

business editors of Institutional Investor News as up-and-comers in the industry. Be

sure to visit emii.com/hfrisingstars for complete profiles on each Star.

The Global Hedge Fund Leadership Report is just one of many Institutional

Investor News special supplements. Check out www.emii.com for our complete offering

of breaking news, data products, web seminars and other information resources.

I hope you enjoy this year’s report and I welcome your feedback!

Joanna RandellEditor of Business Publishing

Customer Service: PO Box 5016, Brentwood, TN 37024-5016Tel: 1-800-715-9195• Fax: 1-615-377-0525 • UK: 44 20 7779 8704Hong Kong: 852 2842 6910• E-mail: [email protected]

Editorial Offices: 225 Park Avenue South, New York, NY 10003. Tel: 1-212-224-3526 • Email: [email protected]

A Publication of Institutional Investor, Inc.© Copyright 2009. Institutional Investor, Inc. All rights reserved. New York Publishing offices:225 Park Avenue South, New York, NY 10003 • 212-224-3800 • www.iinews.com

Copyright notice. No part of this publication may be copied, photocopied or duplicated in anyform or by any means without Institutional Investor’s prior written consent. Copying of thispublication is in violation of the Federal Copyright Law (17 USC 101 et seq.). Violators may besubject to criminal penalties as well as liability for substantial monetary damages, includingstatutory damages up to $100,000 per infringement, costs and attorney’s fees.

The information contained herein is accurate to the best of the publisher’s knowledge;however, the publisher can accept no responsibility for the accuracy or completeness of suchinformation or for loss or damage caused by any use thereof.

TABLE OF CONTENTS

4Leading The Way: A View From All Sides

By Joanna Randell

Three leading hedge fund managers,an institutional investor and aconsultant share their uniqueperspectives on the same pressingissues facing the industry today.

7Risk and Reward: EmergingIndustry Trends

By Jeremy T. Todd, Pershing LLC

Todd examines the impact the financialcrisis has had on the relationshipsbetween hedge funds, bank custodiansand prime brokers, and the emergingtrend of tri-party agreements.

9The Rising Stars of Hedge Funds

By Joanna Randell

Nominated by their clients, peers andmentors, this year’s Rising Starsrepresent up-and-comers from allareas of the hedge fund community.


4 GLOBAL HEDGE FUND LEADERSHIP REPORT JULY 2009

Leading the Way: A View From All Sides—By Joanna Randell

My interviews with Timothy Barrett, CIO, San Bernardino County Employees’ RetirementAssociation; iconic hedge fund manager, John Paulson, President, Paulson & Co; leadingEuropean hedge fund managers Noam Gottesman, Co-Founder, GLG Partners and AndrewDodd, CFO, BlueCrest Capital Management; and award winning consultant Jaeson Dubrovay,Senior Strategist, Hedge Funds, NEPC reveal and compare their different perspectives on thesame pressing issues. Following are excerpts of their answers to my questions. To see theircomplete responses, please visit www.emii.com/hfleadership

Specifically, how have the eventsand changes in the market over thelast year changed your duediligence processes?

PAULSON: Managements of public financialcompanies and ratings by rating agencies haveproven to be unreliable in assessing the outlookfor companies. Management of Lehman, forinstance, continued to maintain they wereovercapitalized right up to the day they filed forbankruptcy. In the structured finance area, hundreds ofbillions of formerly AAA rated securities are now worthless, orclose to it.What this means for us, is that we have to rely on ourresearch in making investment decisions and not on thequestionable conclusions of supposedly expert third parties.

BARRETT: We have been refining our due diligence processover the last five years, with most of our changes taking placeprior to the credit crisis.We’re responsible for investing theretirement monies for almost 30,000 members, so the safetyand security of our investments are of utmost importance to us.We adopted a multi-prong strategy with comprehensive duediligence, covering operations, legal and investment.We splitthe process into pre-hire and monitoring, including visitingmanagers and discussing strategies. However, with thechallenges and events of the past year, we have worked toenhance our due diligence processes further.

GOTTESMAN: The events of the past year haven’t changedour fundamental business.We’re still interviewing managers,performing customer valuation auditing, etc.The increasedregulatory scrutiny, however, has made the market harder forsmaller players to enter.There is a need to be more transparent.Due diligence is a core component of GLG’s work.We have

been, and continue to be, focused on counterparty risk, our useof independent administrators and auditors, and with theincreased requests for managed accounts, we are growing ourlegal, compliance and operational team to further improve theefficiency of our response time.

DODD: Big firms like us who have been in the business a longtime and have been marketing a wide array of processes for along time, already have a good due diligence process.We’re one ofthe few successful managers from the past 12 months.Thingshave changed for other managers, but not for us. In general,investors are more focused on counterparty risk and counterpartyrisk management post-Lehman. In the wake of Madoff, people arekeen to make sure their assets are actually there.The model inEurope is to use an independent administrator, which is not thecase in the U.S., so a number of US funds self-administer.

DUBROVAY: We heightened our sensitivity to managerbusiness models and the impact that the stress in the marketswould have on them going forward. The main areas of focus werestrategy; asset - liability match; staffing and retention; and themanager’s plan for navigating the volatile markets. In addition, welooked at the liquidity of the assets on the balance sheet; whetherleverage is used in the strategy; the stability of the leverageprovider and the composition and stickiness of their client base.

John Paulson Tim Barrett Jaeson Dubrovay



How have the changes in attitudes ormisperceptions about hedge fund investingaffected your business? How are youaddressing it?

PAULSON: The two negatives for the hedge fund industry werethe negative returns in 2008 and losses due to the Madoff fraud.While the hedge fund returns were clearly better than the market,they didn’t provide overall the non-correlation and hedgingbenefits against the general markets that investors expected.Regarding performance, we needed to continue to address to ourinvestors how we always try to run a hedged portfolio bybalancing our long event and short event positions to produceabsolute returns in all markets.While it doesn’t always workperfectly, in 2008 our balanced portfolio allowed us to showpositive returns for our investors even in the face of the severemarket decline. Regarding the Madoff fraud, there are several bestpractices to implement that would eliminate Madoff type fraudsand almost all of the other frauds that have been reported todate.They are: 1) independent custodian; 2) independentadministrator; and 3) accredited auditors.We have all three.Theyare simple to implement and we recommend that investors insistthat their hedge fund managers have these policies as well.

BARRETT: Most misperceptions have not impacted how wework with hedge funds.We’ve always been careful with whom weinvest and always communicated with our board about strategies.We perform stress tests on our strategies to see what couldhappen in a down market. Although we experienced losses likeeveryone, our understanding of our managers’strategies andtheir potential risks helped us avoid surprises and in some casescreated opportunities for us to step up as investment partnerswith rescue capital for a couple of our managers that were facingsevere liquidity problems. One thing that has changed, unlikebefore the credit crisis, is that we have increased our focus onlooking at the manager’s investor base, structure andcompensation.We want to know who the other investors are.

GOTTESMAN: There is an increased focus oninstitutionalized infrastructure. Investors are more sophisticatednow and know they need hedged strategies as part of theirportfolio. One of the lessons from 2008 was that we learnedthat some hedge funds were over-leveraged and excessively-correlated. Now, there is an increased institutional focus onperformance and transparency and liquidity as a totality, asopposed to just seeking the best performance.This is a positivething for GLG – we’ve always had an institutional infrastructureaimed at providing these features.

DODD: We haven’t really encountered any misperceptions.Our client base is half fund-of-funds and half institutions, all ofwhom are extremely experienced professional investors withmandates to invest in hedge funds.They understand hedgefunds are a sector of a broad asset management industry and

needed to manage the wealth of the world. It may help that wewere extremely successful in 2008; all our flagship fundsachieved positive returns.

DUBROVAY: Clients that were invested in hedge funds anddidn’t need liquidity have maintained their conviction to hedgefunds.Those that needed liquidity, from any source in theirportfolio, were frustrated to some extent. In general, clients aremore sensitive to hedge fund operational issues and back officecontrols. In 2007, we initiated a separate operational duediligence track so we can have an independent evaluation ofmanager’s internal controls and back office.We are spendingmore time with our clients on ongoing education to reinforcesome of the benefits of including hedge funds in their portfolios.

What do you think the government could andshould do, if anything, regarding regulation?

PAULSON: Given the size of the hedge fund industry, theneed for investor protection and the potential systemic riskposed by large, leveraged hedge funds, I believe it is importantto have mandatory registration with the SEC above a certainminimum size and limitations on leverage through definedmargin requirements by investment category.

BARRETT: It’s a good idea to have hedge funds registered,but it’s not a panacea. No regulation or registration process willdetect all frauds.We have outside auditors who spend threedays with our new mangers to take an in-depth look at theirbusiness. It is highly improbable that a fraudulent managerwould allow an in-depth internal operations review.Too manysophisticated investors have not put the resources into thebasics of due diligence – in other words, the mundaneoperational reviews. Neither registration nor regulation cantake the place of solid due diligence practices.

GOTTESMAN: As both an investor in hedge funds and ahedge fund manager, I believe that regulation is incrediblyimportant for investor confidence and for the continuedgrowth of the alternative investment industry. Many of the fearsassociated with hedge funds could be alleviated quickly if thirdparty administration, custodian services and valuations wereenforced uniformly. Mandatory registration with the SEC is apositive in my mind.This is all part of the industry growing upand becoming more institutionalized.

DODD: Our area of current focus is the proposed EUregulations.There is a desire in Europe to see hedge funds moreregulated, although reports like the Turner Report, say theyplayed little role in the financial crisis.The UK governmentneeds to work the details of the proposals at a higher level.

DUBROVAY : While we believe intelligent regulation isbeneficial for the industry, this is easier said than done andoften leads to errors of omission that are hard to detect. We



believe that having managers register with the SEC will notnecessarily produce more findings of fraud because generallyfraudsters will not register – it is the enforcement efforts thatwe believe will provide stronger regulation. From a practicalstandpoint, institutional investors, and their advisors, have hada strong influence on improving the quality of due diligenceperformed on hedge fund managers.

What do you think will be the major changesto the industry, and hedge fund investing, inthe next five years?

PAULSON : Generally, I think the industry will become moreconcentrated and somewhat more regulated. However, I dobelieve hedge funds provide many investment benefits to clientsand I believe hedge funds as a group will continue to grow andbecome a permanent part of the alternative investment arena.But with growth comes responsibility to not only investors but tothe overall business community and public.

BARRETT: It will be a time of transition for the industry as awhole. Money managers are going to need to rebuild theconfidence of investors over the next five years.The value addof fund-of-funds will be derived from a more consultativeapproach, with an emphasis on assisting plan sponsors to buildout satellite positions in hedge funds. Fees will continue to bedriven down on both a base and carry basis. Plan sponsors willalso need to keep a careful eye on funds shutting down and re-opening new funds in an effort to avoid high-water marks.

GOTTESMAN: I think it will return back to basics withabsolute return mandates.There will be a focus on capitalprotection. Funds will have to be nimble to take advantage ofniche and opportune investments.There will be less leverage,fewer market participants and more regulation. Having bothalternative and traditional investments will become morecommon, GLG already does this.There will be a greater focus onasset - liability matching.

DODD: It will continue to be difficult for new entrants to launchfunds in the hedge fund space.The expense of a launch will begreater with all the regulation and there is less availability ofcapital and [the business] is much more institutionalized. Peoplewill still do it, but not in the same numbers.The industry won’tresume the growth rate of a few years ago.There will be a higherlevel of discipline. Investors won’t invest with managers who areinvesting outside their core strategy and there will be moreintense due diligence. Regulations will also make an impact.

DUBROVAY : Managers will focus on the two primaryvulnerabilities of hedge funds – the asset - liability mismatch andthe high-water mark. On the first count, managers will adjust theirredemption terms to more closely match the composition of theirassets – perhaps a bit more than necessary given recent illiquidity

events.With regard to high-water marks, managers who areserious about their businesses will build in more cash reserves toprotect their businesses after a year of negative performance.

What keeps you awake at night?

PAULSON: Our investment strategy is very focused onminimizing losses and downside volatility.While we strive tomaintain a balanced portfolio, the markets don’t alwayscooperate, leading to periodic negative swings in the portfolio.Most of the time, the market swings back in the other direction,erasing the losses and producing gains, but other times theinvestment may go the wrong way due to either unexpectedevents or a miscalculation of the opportunity. In hindsight, it’susually easy to diagnose the problem but when you in the middleof it, it’s not always easy to see.That conflict of whether to keepthe position, cut it back, or eliminate it can produce some anxiety.

BARRETT: Now that we are through a large part of the creditcrisis, I sleep a little better. But the risk of government over-regulation and government intervention in the bankruptcyprocess concerns me greatly. If typical over-regulation occurs, itwill hurt the value proposition of hedge funds.They serve anincredibly important role in making the capital markets moreefficient. Intervention in the bankruptcy process has dramaticimpacts on distressed debt managers and on the markets ingeneral. If you cannot model downside risk and probablerecoveries due to interference with the basic tenants ofcontract law, bankruptcy and capital seniority, then the cost ofdebt capital must increase and we are likely to face longer-termstructural problems.

GOTTESMAN: Everything! Principally, we’re concerned withdelivering strong performance for clients and ensuring theteam members enjoy working with GLG.We have well-developed risk teams and things can’t get much harder than2008, but we’re always keeping an eye out. I’m always awakeand thinking about what may happen.

DODD: We’re a well integrated financial system with multiplegood relationships. But we’re always worried about systemicrisk; I think we all felt that post-Lehman. It’s worrying if there issomething going wrong in another company over which youhave no control.

DUBROVAY : I’m still concerned about the few poor qualitymanagers still out there, and how they can dupe inexperiencedinvestors and even experienced ones.We believe that commonsense, coupled with constant validation of what the managerstell us, are the most useful tools to evaluating managers. Finally,don’t fall in love with performance!

To read my interviewees’ additional perspectives on risk,compliance and prime brokers please visit emii.com/hfleadership



There are, however, positive signs that hedge fund managerswill not waste the lessons learned of the past year and half. Morethan half of those surveyed say that they now monitorcounterparty risk on a daily basis (even if most still lack asystematic risk management approach), as the strength offinancial institutions is coming under far more intense scrutinythan before.

The crisis has also opened the window to a variety ofinnovations that are transforming the ways in which hedge fundmanagers run their businesses.These emerging trends include are-evaluation of traditional prime brokerage relationships, therise of tri-party agreements utilizing bank custodians, and aneffort by more investors to utilize separately managed account(SMA) structures.

The most obvious response to counterparty risk has been acloser look at prime brokerage relationships. Diversification is afavorite remedy for many kinds of risk, and counterparty risk isno exception. Hedge funds are significantly expanding theirservicing partnerships to include multiple prime brokerrelationships depending on the size of the firm. Fund managersare also cutting back on the level of concentration of theirexposure by spreading assets more evenly across primebrokerages, rather than allocating half or more to a single firm.

A far more fundamental transformation, though, is a change notmerely in number, but in kind: a shift away from a prime broker-centric industry toward one with a greater role for custodianbanks. Banks offer an alternative for custodying cash and fullypaid for securities, while short positions and margin financingare held with the prime brokerages. As risk-wary fund managersrealize, banks are generally less leveraged than broker dealers

(i.e., prime brokers).They fall under a separate regulatory body,the Federal Deposit Insurance Corporation (FDIC), which offersaccount protection that differs from that of the SecuritiesInvestor Protection Corporation (SIPC).

This drive to diversify custodians also helps explain a relatedtrend sweeping the industry: the proliferation of tri-partyagreements among hedge funds, bank custodians and primebrokers. Such agreements can help managers buildrelationships with custodial banks and prime brokers and offernew ways to manage counterparty risk while implementingleveraged and short strategies more efficiently.

However, it is important to remember that all tri-partyarrangements are not created equal.The ability to “plug andplay”multiple custodians requires significant investments ininfrastructure and ongoing management, and this is especiallytrue when facing the daily need to report, reconcile, transfer andtransact shorts and longs—including pledged and unpledgedcollateral—at different custodians.Tri-party agreements canoffer significant advantages to hedge fund managers, butmanaging them is still a job in itself.The key question is, whosejob is it?

Short-enabled fund managers contemplating a tri-partyagreement should make sure that most of the daily operationalburden will fall on the bank and prime broker, not on his or herown staff. Contract negotiation and account setup should bestreamlined.There should be a single point of contact at theprime brokerage, reducing the need for the fund manager to actas the main go-between for daily communications aboutcollateral management. Administration and accounting at thebank must be tightly integrated with execution, financing and

Risk and Reward:Emerging Industry Trends —by Jeremy T. Todd

As the saying suggests, never let a good crisis go to waste. And we have certainly weathered quite a crisis. The hedge

fund industry lost approximately half of its assets, storied WallStreet giants failed and an astonishing number of fundmanagers—96 percent, according to a recent survey—now citecounterparty risk as their number one consideration in selectingprime brokerage relationships.1

Jeremy T. Todd

SPONSORED ARTICLE



client service at the prime broker, preferably on a sharedplatform.The arrangement should provide simplified collateralmanagement, flexible reporting and all of the financing optionsthe manager needs to effectively implement the fund’s strategy.

Tri-party arrangements currently varywidely in their ability to deliver all ofthese benefits, and some carefulconsideration is warranted. Goingforward, market trends will pressuremany prime brokers and banks tofurther enhance their tri-partysolutions. After all, short-enabledfunds are becoming more popularamong a much broader range of investors, and fund managersare expanding beyond the traditional U.S. equity universe indeveloping new offerings.The sheer growth of these funds willforce the industry to streamline their management.

The rise of tri-party agreements is not the only industry responseto concerns about counterparty risk.We are also seeing asignificant shift toward SMAs rather than pooled investmentstructures—with some analysts expecting a quadrupling ofmanaged account assets in 2009. Few could have foreseen thisdevelopment just two years ago given that, until recently, mosthedge fund managers strongly resisted offering managedaccounts, and relatively few investors were in a position to pressfor them. However, the financial crisis spread an epidemic ofconcern about counterparty risk, lack of transparency and fraud,while extreme market volatility left investors feeling trapped bygateways, lockups and redemption suspensions.

To many investors, SMAs seem an ideal answer. First, they easilyallow institutional investors to diversify counterparty risk byleveraging their existing bank custodian and prime brokeragerelationships. Second, they provide the transparency needed toprotect against fraud: managed account investors can see fulldaily details on both long and short positions, not merely broadsector and diversification information. Finally, managedaccounts give investors the control and liquidity they nowdemand.To be sure, many of the largest managers still resistrequests for SMAs for a multitude of reasons in managing theirbusinesses. And some strategies, such as investing in privateplacements, may be ill-suited to separate account structures.Nonetheless, many major institutional investors are nowdemanding SMAs—and many are receiving them because ofthe current financial climate.

In addition to multiple custodians, tri-party arrangements andseparately managed accounts, a wide range of other bestpractices are now coming into favor with leading managerslooking to mitigate risk. For example, many firms have becomemindful of the principle that shared accountability means noaccountability, and have assigned independent oversightresponsibilities to one or more full-time staff members

specifically charged with analyzing counterparty risk.Technology also plays a leading role. As firms outgrow the ad hoc spreadsheets that many have relied upon to manage riskand collateral, they are beginning to deploy more sophisticated

in-house valuation tools,complemented withindependent third-partysolutions and services.

Business processes, too, arebecoming significantly moreformalized, with consistentportfolio and riskassessments, systematic daily

evaluation of collateral management and scheduled exchangesof financials and operational guidelines with counterparties.Firms are also finding that maintaining strong internal controlsrequires constant vigilance of external events, ranging fromstructural market changes that might increase exposure, to newbest practices proposed by such organizations as the President’sWorking Group in the U.S. and the Hedge Fund Working Groupin the U.K.

The financial crisis has opened a window for change within thehedge fund industry. Once-trusted relationships are nowregarded with caution. Financing is down. Investors, especiallylarge institutions, currently are in a much stronger positionwhen negotiating more favorable structures for fees, accountsand relationships. But, at some point in the future, that windowof transformation will begin to close.The industry will adjust,demand will catch up with supply and the balance of power willshift back more from investors to managers. Hedge funds arealready starting to post record gains, and investors’ appetite forrisk is increasing from the dire days of last fall. However, it wouldbe naive to assume that simply because the window is onlytemporarily open, that the actual changes being ushered in willbe transitory as well. Both investors and managers are now fullyaware of the seriousness of both fraud and counterparty risk.

Transparency, diversification and financial strength will remainthe watchwords of hedge fund industry relationships for a longtime to come. Rather than stonewalling against such changes,leading fund managers are seizing upon them as anopportunity to build stronger infrastructures for the future, andresponding with innovation and creativity to capitalize on anever-evolving investment landscape.

Jeremy T.Todd is Director and Head of Client RelationshipManagement of Pershing Prime Services, a service of Pershing LLC, asubsidiary of The Bank of New York Mellon Corporation.

For more information, please contact Jeremy T.Todd [email protected] or visit www.pershingprimeservices.com.

1

Aite Group (commissioned by Pershing LLC), Risk and Reward: HedgeFunds Changing Views on Counterparty Relationships, 2009.

“The financial crisis has opened a

window for change within the hedge

fund industry. Once-trusted relationships

are now regarded with caution.”

SPONSORED ARTICLE



FRANK BARBARINOConsultant, Alternative InvestmentsNEPC, Boston, MA AGE: 32EDUCATION: B.A. Economics and Music,Union College, Schenectady, NY; M.A. Business Administration, University ofRochester, Rochester, NY

Frank Barbarino joinedthe alternativesdivision of consultingfirm NEPC in June2008, advising theinstitutional clientbase on complexhedge fund matters.

With over seven years of experience inresearching and recommending hedgefunds, Barbarino is noted for having astrong advisory role with clients. Formercolleague, Steve Turi, CIO, RiverviewAdvisors, noted Barbarino’s ability to leadand advise.“Frank began as a younganalyst, and was able to contribute quicklyto a team that included individuals withover 20 years of experience.What you see iswhat you get with Frank.There are nopolitics and he is genuinely a good guy.”

Barbarino encourages his clients to takeadvantage of the great dislocations in thecredit space through the variety of strategiesand instruments available and estimates thatapproximately 20-25 of NEPC’s clients havesuccessfully invested in credit opportunities.Barbarino is also advising clients to leveragetheir hedge fund relationships to takeadvantage of the dislocations in the realasset investment space.

Prior to joining NEPC, Barbarino acted asan independent consultant to a $3 billionfamily office. Before that he was a seniorhedge fund analyst for Riverview Advisorsfor five years, involved in due diligence, risk

monitoring and client communications. Hiscareer goals for the near future remainwithin the hedge fund sector,“I’d like tocontinue to work with pensions,foundations and endowments as aninvestment consultant focused in hedgefunds and other alternative investments.”

JAMES BERGERAsset Manager, Portfolio AnalystGLG Partners, London, UKAGE: 29EDUCATION: M.A. Land Economy, Universityof Cambridge, Cambridge, UK

At 29, James Berger hasalready held positionswith three leadingfinancial firms. From2001 to 2005 heworked for GoldmanSachs in equity hedgefund sales. After two

years in a similar role at JPMorgan he joinedGLG Partners’portfolio manager, and formercolleague, Markus Mez to help managemoney for the European Opportunity Fund.

Berger has been trading large cap stocksfor eight years, successfully utilizing hismarket experience to navigate the marketdownturn, avoid illiquid investments andcontinue to focus on stock selection toidentify trading opportunities for shortterm alpha generation. Capital preservationand appreciation are the two main goals ofthe Mega-cap European equity strategywhich deploys $350 million.With a grossreturn rate of 15.5% for 2008, Bergerattributes the success of the fund to thedisciplined investment approach, whichfocuses on a limited investment universecombined with strict risk management.

Noted for his strong directionalknowledge, Berger joined GLG because it

offered an established platform with goodresearch information, adequate capital andan opportunity to work again with mentorand boss Markus Mez, who has acomplimentary skill set.

Berger’s long term plans are to focus onthe success of the European OpportunityFund.“I would like to be involved in furtherimproving performance of the fund,growing assets under management and todeliver sustainable returns for investors”says Berger.

KELLY CARDWELLManaging PartnerCentral Square Capital, Warrenville, IL AGE: 34EDUCATION: B.A. Finance, Bradley University,Peoria, IL

Central Square Capitalbegan trading onAugust 3rd, 2007, andsaw assets undermanagement growfrom $4.3 million to$35 million in justunder two years.

Cardwell is the only full-time employeeof Central Square. He reduced operationalcosts by relocating from Boston to aChicago suburb.“The reason I started witha small asset base and have worked to keepoperational costs low is that it eliminatesthe pressure to swing for the fences.“Headmits his long only manager backgroundcaused some initial investor concern.“Thefund has a net return of +107% frominception through May 31, 2009. Hopefullythis puts to bed any concerns about myability to manage through a bear market.”

Cardwell explains his success bystructuring the fund as simply as possible.He says,“I use a fundamentally based,

FRANK BARBARINO

JAMES BERGER

Visit www.emii.com/hfrisingstars for complete profiles.

KELLY

CARDWELL

HEDGE FUNDS

THETHE

OFOFThis year’s Rising Stars and the winners of Alternative Investment News’ annual hedgefund awards were honored at the 7th Annual Hedge Fund Industry Awards dinner andceremony on June 22nd in New York City. For full coverage of the event, includingphotos and videos, please visit www.hedgefundindustryawards.com.



bottom up process to identify attractivelong and short equity opportunities.”

Former colleague Brian Kennedy ofFidelity Investments is not surprised atCardwell’s success.“Nobody I know worksmore diligently to uncover fundamentallymispriced securities.The ever-shrinkinginvestment horizon of today’s investmentmarket opens a plethora of opportunitiesfor Kelly’s skill set” he says.

Cardwell plans to limit the fund to $300-$400 million.“I have no intention of being a$1 billion plus fund. Research has shownthat it is significantly more difficult forthese mega funds to post superior results.”

Prior to founding Central Square,Cardwell held the position of analyst atFidelity Investments from 1997 until hisdeparture as portfolio manager in 2007.

PETER CAREYDirector, Absolute Return StrategiesNew York State Common Retirement FundNew York, NYAGE: 40 EDUCATION: B.S. PoliticalGeography/Systems Engineering, UnitedStates Military Academy West Point, NY;MBA. Finance, University of SouthernCalifornia Business School, Los Angeles, CA

New York StateComptroller Thomas P.DiNapoli hired PeterCarey to the New YorkState CommonRetirement Fund inthe spring of 2007,and soon appointed

him to head the absolute return strategiesprogram.When Carey took the reins of theprogram, 85% of the allocated capital wasinvested in seven fund-of-funds and theremaining capital was in four large multi-strategy funds.“Comptroller DiNapoliwanted to conduct a thorough review ofthe program and the merits of all of itsunderlying investments. Our evaluationincluded all of the 184 underlying hedgefund investments which were included inthe portfolios of the seven funds of funds,”says Carey.

“We determined that a directinvestment portfolio with a moreconcentrated number of funds wouldeliminate the redundancy in the portfolio,

achieve better risk-adjusted returns andreduce the overall cost structure of theprogram.We also wanted to eliminaterelationships that did not provide value tothe program,” continues Carey.

Carey immediately took steps to initiatethe restructuring plan at New YorkCommon.“We also developed a macro-economic view which is crucial tosuccessful investing and which we believecontributed to our out-performance.”Therestructuring plan has resulted in loweringcorrelation to the public markets,eliminating redundancy, and delivering acost savings in excess of one percent of thehedge fund portfolio. Since Carey has takenover, the program has outperformed theHFRX by 400 basis points.

Prior to joining New York Common,Carey served in the United States Army asan infantry officer in various positions ofleadership at the battalion and companylevel. After resigning his commission, Careyearned an MBA in finance and joined BearStearns in the institutional fixed incomedepartment.

NEIL CHELODirector of ResearchBenchmark Plus, Tacoma, WA

AGE: 37EDUCATION: B.S. Finance and M.S. Finance,Bentley College, Waltham, MA

Neil Chelo joinedBenchmark Plus as ananalyst in October2003, and rose to hiscurrent role as directorof research. Heoversees a six-personteam responsible for

conducting operational due diligence andanalyzing hedge funds.The firm has grownfrom $350 million assets undermanagement to $1.4 billion today, with oneof the longest audited track records for aPortable Alpha Fund-of-Fund.

“Benchmark is a Hedged Fund-of-Fund”says Chelo.“We create a customizedbenchmark to measure each manager’sreturns, isolating a manager’s returns thatare derived from systematic risk and thereturns from manager skill.”Chelo says thatBenchmark focuses on alpha, and selectsmanagers that have sustainable,competitive advantages. “We go out of our

way to look at new strategies and pocketsof inefficiencies.We look at the EfficientMarket Hypothesis (EMH) and findmanagers that violate as many of theseEMH assumptions as possible.”

Chelo came across the Madoff scandalwith Harry Markopolis and Frank Casey inthe late 1990’s while working at RampartInvestment Management. After taking theirfindings to the SEC, Chelo continued toswap notes with Markopolos on the fund.Says Markopolos,“Chelo, being an expert inequity derivatives, asked all the relevantquestions and, of course, the Feeder Fundprincipals provided totally incorrectanswers to each question that was asked.“He doesn’t tolerate anything less than theabsolute truth when it comes to integrityand especially when it comes to investmentmanagement.” Chelo has implemented thesame strict due diligence processes withinBenchmark Plus, leading to the uncoveringof numerous cases of fraud.

LOÏC FERYManaging PartnerChenavari Credit Partners LLP, London, UKAGE: 35EDUCATION: MsC Finance, HEC, Paris, France

Loïc Fery is a wellrespected figure in thecredit industry and acredit derivatives andhigh yield expert. After13 years managingcredit trading andstructuring activities

within investment banks, in 2008 he appliedhis trading experience to the hedge fundindustry, founding one of the bestperforming credit hedge funds in Europe.

As of June 15th 2009, Chenavari Fundhas had only positive monthly returns sinceits inception in September 2008, with anannualized return of 32% for a 6% dailyvolatility.This was achieved throughpursing corporate credit strategies.The 15person firm expresses credit fundamentalviews with a sophisticated riskmanagement approach. Fery says “Mostinvestors are currently looking for creditmarket opportunities. Our approach allowsthem to capture dislocations in creditmarkets while keeping a monthly liquidityon their investment. Additionally, we have acredit-spread neutral approach, keeping

PETER

CAREY


NEIL

CHELO

LOÏC FERY



the strategy immune to bottom picking.”Despite a strong, long-standing track

record in the credit markets, Feryexperienced the challenges of setting up asan investment manager in the middle of arecession.“ Major allocators sufferedredemptions and there was no capital. Butwe started the fund in difficult times as wewere confident in our capabilities toperform in a volatile environment,” saysFery.

Prior to founding Chenavari, Fery wasGlobal Head of Credit Markets for Calyon inLondon, where he managed more than 200credit traders and structurers. He was alsothe youngest member of Credit Agricole“Cercle des Dirigeants”. Prior to that, heworked at SG in London and Hong Kongwhere he was a founding member of theCredit Derivatives product-line in 1997. Heis also co-author of several books on creditderivatives and securitization.

STEVEN GROSSPrincipal, Co-Portfolio ManagerPenso Capital Markets, LLC Cedarhurst, NYAGE: 26

Steven Gross begantrading optionstrategies in highschool using moneyfrom his grandparents.At age 17, he took asummer job atLightning Trading, the

proprietary trading arm of MBF ClearingCorp., one of the largest clearing firms at theNYMEX, he ended up deferring college toaccept a full time position in the fall.

Gross later joined Millennium Partnersto develope statistical arbitrage tradingstrategies.“There was a unique paradigmshift when the tech bubble burst andtrading went from decimals to pennies.Theopportunity set changed dramatically andthe stat arb business went through arecalibration period,” explains Gross.

The drop-off of equity statistical arbitrageopportunities prompted Gross to take amore macro focus and to apply strategiesacross asset classes. In 2002 he joined PensoCapital Markets, a macro investment firm, asa partner. At Penso, he co-manages the firm’smacro strategies, which include the Global

Macro Opportunities Strategy, adiscretionary absolute return macroproduct, and the Alpha Risk Overlay, aunique macro overlay strategy.

Penso Managing Principal, AriBergmann, notes Gross’s skills willguarantee him a bright future in the hedgefund industry.“His ability to stay calm andfocused in extraordinary market conditions,like 2008, and to balance risk and rewardwill make him one of the top risk adjustedmoney managers,”says Bergmann.

The firm is currently in growth mode,aiming to grow from $400 million to $1-2billion, and focusing on increasing theirinvestor base, much of which is made up ofother hedge fund managers.“We are riskfocused investors. Returns are the endresult and risk management is the meansto that end,” says Gross.

JEFF HOLLANDPartnerLiongate Capital Management, London, UKAGE: 34EDUCATION: B.B.A Finance and Accounting,Baylor University, Waco, Texas; MSc. Finance,London Business School, London, UK

Jeff Holland is a co-founder of LiongateCapital Management.He is on the firm’sInvestment Committeeand heads up theclient riskmanagement and

investor relations function.Formed in 2003, Liongate’s flagship fund

of hedge funds has topped industry leaguetables, and the absolute and risk adjustedreturns have been in the top three bestperforming funds, achieving just over an11% annualized return rate. Says Holland,“we’re known in the industry as fairly activein re-allocating [our] portfolio over time,looking at strategies within the macroeconomic environment and shifting theseallocations to best performing strategies.”Making investment decisions comprisestwo thirds of Holland’s role at the firm, withthe rest focusing on investor relations.“[We]opened the fund to outside investors in2004, and by 2005 we were nominated foran emerging manager award,”Holland says.

Liongate currently has approximately

400 clients, including sovereign wealthfunds, public funds and private banks. Lastyear, while most funds sufferedredemptions, Liongate increased theirassets by 67%.

Brian Altenburg, a managing directorwith Bank of America, has known Hollandprofessionally for over six years andbelieves that Holland, and Liongate, willcontinue to see success.“I believe that Jeffhas the foresight and an understanding ofthe industry to see the opportunities forgrowth and move [Liongate] forward. I cansee Jeff further leading to develop Liongateover the coming years, and taking his placeamong the leadership of the alternativesindustry” says Altenburg.

Prior to founding Liongate, Holland heldthe position of vice president at DeutscheBank in investment banking, before whichhe was a manager consultant forPricewaterhouseCoopers.

JOE HOLMANFounder and Managing PartnerColumbus Avenue Consulting, LLCNew York, NYAGE: 45EDUCATION: B.S. Business Administration,Clarion University of Pennsylvania, Clarion, PA;M.B.A. Rutgers Graduate School ofManagement, Newark, NJ

In 2004, Joe Holmanfounded his own fundadministration firm,Columbus AvenueConsulting, LLC, toadvise managers ontheir internaloperations, accounting

and fund structures.The New York basedfirm currently has $5 billion in assets undermanagement, 45 employees worldwide,and a primary client base of hedge fundsand fund of funds.

Holman discusses how the changingdemands of investors have impacted hisbusiness.“Managers and investors arelooking for a validated depositary ofinformation.They want access to thislibrary on a regular basis and have itsynchronized within their house.” Holmanalso notes that the down market hascreated a lot more competition, forcing

STEVEN GROSS


JEFF HOLLAND

JOE

HOLMAN



firms to further differentiate their services.Before founding Columbus, Holman was

a partner with accounting firm Rothstein,Kass & Company, where he built up theadministration practice. Holman says themost surprising aspect of the hedge fundindustry is how the strong personal businessrelationships intertwine with larger financialsystems,“[…] overlaying this small townpractice are the largest and mostsophisticated institutions. It is quitesurprising how the bureaucratic nature ofinstitutions can coexist with the verypersonal nature of the hedge fundcommunity.”

Former Rothstein colleague, MauryCartine, believes Holman was distinctivefrom early on.“Joe has distinguished himselfagain as an industry leader with a vision forthe future that is founded on a strongcombination of technical skills, acommitment to the hedge fund and privateequity fund industry and most importantly,a commitment to his clients”says Cartine.

EWAN KIRKCEOCantab Capital Partners, Cambridge, UKAGE: 48EDUCATION: B.S (hons) Physics andAstronomy, University of Glasgow, Scotland;MA Mathematics, University of Cambridge,UK; PhD Mathematical Physics, University ofSouthampton, UK

Formed in 2006,Cantab CapitalPartners is a“systematicallymathematical fund,”heavily skewedtowards math andscience. Ewan Kirk is

one of the co-founders of Cantab, alongwith Erich Schlaikjer (ex-Goldman) andChris Pugh (ex-KBC). Kirk is responsible forthe day-to-day research, strategic directionand risk decisions.“[that’s the] good thingabout your own firm, you do everythingand it’s an exciting thing to do. Feels morepersonal and close to the metal” says Kirk.

Kirk departed from Goldman Sachs after13 years as the Head of EuropeanQuantitative Strategy.“I thought aboutwhat I could potentially be good at”explains Kirk.“We started the firm with two

guys in a tiny office in Cambridge, and itsnowballed from there.” Since inception inMarch 2007, the firm has grown from $30million to $750 million in assets undermanagement, with a 25% annualized rateof return.

Richard Bornhoft, president and CIO offund-of-fund,The Bornhoft Group, citesCantab as one of their premier up-and-coming fund managers.“We expect themto develop into one the top tier CTAs withinthe managed futures sector.”

Cantab’s strategy is diversifiedsystematic global macro, trading incurrencies, commodities, rates andequities. Twenty employees carry out allresearch, modelling and analysis internally.As the business grows, Kirk is not certain ofthe fund’s ceiling.“It’s a relatively scalablebusiness and [I’m] not clear yet on wherethe limit may be. Maybe some strategiescan’t be scaled and have to be capped at$1 billion, but others will be developedwhich will allow increased capacity”.

JOSH LEVINESenior Vice PresidentPermal Group, Brooklyn, NYAGE: 35EDUCATION: B.A. International Affairs,University of Colorado, Boulder, CO; M.I.A. International Economics Policy,Columbia University, NY

Josh Levine joinedPermal Group in 2007to help develop theinstitutional vision ofthe company. Levinehas quadrupled theinstitutional clientbase of the alternative

asset management firm, growing it toinclude sovereign wealth funds, publicfunds,Taft Hartley funds and foundationand endowments.

His responsibilities include running theinstitutional team, executing strategies,and making sure those strategies meetthe needs of the clients. Levine hassuccessfully steered the team to seeminimal investor redemptions of only afew basis points and continuedconducting thorough due diligence,“[we]navigated the market well, the portfolioswere well constructed before the disaster

hit and we remained more liquid thanmost fund-of-hedge funds” Levine says.

Levine notes the challenges ofmaintaining investor confidence during thedownturn.“It was a challenge to keephaving well constructed portfolios that dowell in the market.We had a big picture fordue diligence from early 2007.We got rid ofeverything that had an acronym, e.g. CDO,SIV etc and reduced this by June 2007 soinvestors could get redemptions if theywanted to.”

Carlos Valle, retired managing directorfor Merrill Lynch notes Levine’s ability toapply technical advice to the client’sbenefit.“His true acumen comes fromtaking technical knowledge andunderstanding how to put it to work forclients in the context of the many otherstresses associated with his client’sindividual situation.”

JOHN MOODYCEOJ E Moody & Company LLC, Portland, ORAGE: 51EDUCATION: B.A. Physics, University ofChicago, IL; M.S. Physics, & Ph.D. TheoreticalPhysics, Princeton University, NJ

Launched in 2006, J EMoody & Company’scommodity relativevalue programcurrently boasts anannualized return of17% and was up12.4% for 2008. Its

founder, John Moody, who is a physicistand computer science professor, createdthe firm in 2001 to put his research ideasinto practice. He started by trading thefinancial markets on a directional basis,and began developing relative valuestrategies in 2003.

With everything developed in-houseby a team of eight, the strategy captureschanges in relative price between relatedcommodity contracts. Currently at $200million in assets under management,Moody believes the fund can handle$300-$500 million total.

Moody began his career in academia.After earning a PhD in physics fromPrinceton, he became a member of the

DR. EWAN KIRK

Visit www.emii.com/xxx for complete profiles.

JOSHLEVINE

JOHN

MOODY


computer science and neurosciencefaculties at Yale, and taught at OregonGraduate Institute, where he founded agraduate program in computationalfinance. He is also the author of over 65scientific papers. In addition to hisacademic responsibilities, Moody has actedas a consultant for several hedge funds andinvestment banks.

Moody took leave from full-timeteaching in 2003 to focus on building histrading business. His successful transitionfrom academia to asset management hascome as no surprise to his formercolleagues and peers. Peter Bolland, whoworked with Moody while completing hisPh.D. notes “John’s key strength is beingable to bring common sense and prudenceto financial forecasting with state of the artstatistical models.”

On June 1, 2009 his firm launched a newinvestment vehicle, an offshore masterfeeder fund, with the aim of achieving $300million in assets under management.Moody plans to continue building J EMoody & Co. through identifying profitabletrading opportunities in commoditiesbased on quantitative models.

ANNA NIKOLAYEVSKYFounder/CIOAxel Capital Management, New York, NY AGE: 39EDUCATION: B.S. Economics, New YorkUniversity, NY; M.B.A. Finance, ColumbiaBusiness School, NY

Anna Nikolayevskyfounded Axel CapitalManagement in 2002.Focusing onlong/short large capUS equities, the firmcurrently has $110million in assets under

management.“I have been interested instocks since my teens which made me a bitof a rarity. I’ve always liked analyzingdifferent businesses. There is greatintellectual satisfaction when our analysisis rewarded by an anticipated outcome.”

With four employees, everything at Axelis carried out internally including alloperations, financial modelling andresearch.The fundamentally focused firm iscurrently building on its historical good

performance and firm growth.One of the most difficult things on Wall

Street is to maintain an out of consensusopinion, yet that is precisely what Axel didin 2008. By capturing the mismatchbetween reality and corporatemanagement expectations, the strategyoutperformed, returning 30%. “We zeroedin on companies susceptible to thedeveloping credit shock”explainsNikolayevsky. She sees furtheropportunities ahead.“There is still a greatdeal of dislocation and fear in the equitymarket, which will provide remarkableinvestment opportunities”Axel hascontinued to outperform in 2009 and is upover 25%.

Prior to founding Axel, Nikolayevsky heldan analyst position at Zweig-DiMennaAssociates, LLC and before that, held asimilar analyst position at Goldman SachsAsset Management, focusing on adiversified group of industries ranging fromautos to semiconductors and software.Nikolayevsky is also currently co-chair of thePortfolio Manager Peer Advisory Council of100 Women in Hedge Funds and a memberof the Economic Club of New York.

ANNA

NIKOLAYEVSKY

Congratulations!

Joe HolmanFounder & Managing Partner

to Columbus Avenue Consulting's FounderJOE HOLMAN,

named one of the"2009 Rising Stars of Hedge Funds"

by Institutional Investor

TORONTO150 Consumer RoadToronto, ON M2J 1P9416.499.9600

DALLAS2651 N. HarwoodDallas, TX 75201214.635.4500

NEW YORK 152 W. 57th StreetNew York, NY 10019212.500.6200

w w w . c o l u m b u s a v e n u e . c o m



JARED PERRYManaging Partner/CIOStonehorse Capital Management, Boston, MA AGE: 32EDUCATION: B.S. Business, Wake ForestUniversity, Winston-Salem, NC

Fund-of-fund,Stonehorse Capitalfocuses on emergingmanagers in thelong/short equity andevent-driven space.Jared Perry co-founded the fund in

2008 with Joshua Gold. They madecontacts in the emerging manager fieldand saw a real need for this type ofproduct. Gold notes that Perry had thenecessary prime experience to make theventure a success.“Jared started andmanaged probably the most sophisticatedemerging manager platform for DukeUniversity’s endowment through theirmanagement company (DUMAC) withover $1 billion of notional exposure inconcentrated LP investments within theemerging manager space. We felt wecould help evolve the industry and focuson smaller, newer funds that hadn’t hadthe operational or performance issues oflarger funds.”

January through August of last yearwas spent structuring and raising assetsfor the fund which launched on August 1st,2008. At approximately $15 million inassets under management, Perry isaggressively trying to raise more capital.“We would likely close the fund between$500 million and $1 billion, as that’s themaximum capacity for this strategy” Perrysays.

Perry conducts extensive due diligenceprocesses on new managers.“We look atmanagers who are transparent in theirstrategy and have reasonable fee structuresand terms.We look primarily at plain vanillaequity strategies and appropriatestrategies for the environment.”

Perry concludes,“I would like to seeStonehorse help redefine the perceptionof fund of funds. Ten years from now, Ihope to look back at a long list ofaccomplished hedge funds in which we

were early investors and contributors totheir success.”

JOSHUA PRESSPartner/Head TraderGoldenTree Asset Management, Rye, NYAGE: 38EDUCATION: B.A Sociology, University ofPennsylvania, PA

Joshua Press was thefirst external hire forleading alternativeasset managementfirm GoldenTree. Sincejoining the firm in2000, Press has servedas the head trader for

GoldenTree’s multiple funds, growing thefirm from $60 million to over $9 billion inassets under management.

Working closely under CIO/CEO, SteveTananbaum, Press is responsible forensuring best execution of trades and foreverything going in and out of theportfolio, with a specialised focus on highyield and credit derivatives. Tanabaumsays that Press is an integral member ofthe GoldenTree team.“He is theconsummate professional and leads byexample. He is someone you want in yourbunker when you go to war; he has helpedcreate an excellent culture at the firm” saysTananbaum.

Like most financial firms, 2007-2008presented some of the largest challengesfor Press.“[The industry] clearly has a lot ofwork to do to regain the trust andconfidence from investors thatexperienced significant losses throughthis unprecedented period of time” saysPress. He notes that the pain of 2008 isstarting to come to fruition,“on the flipside of the coin we are seeing incrediblyattractive investment opportunities withhigh margins of safety. Nowhere is thismore apparent than in the creditmarkets.”

Press started his career on the floor ofthe New York Stock Exchange with FloorBroker Network. After two years he joinedthe MBS desk of Credit Suisse First Bostonand then moved to First Dominion CapitalLLC as a vice president.

KEVIN P. SCANLANPartnerFinancial Services Group, Dechert LLPChappaqua, NYAGE: 38EDUCATION: B.A. Classics & Economics,Fordham University, NY; J.D. FordhamUniversity School of Law; LL.M. Taxation, NewYork University

Kevin Scanlan is aspecialist in hedgefund law forinternational law firm,Dechert LLP. Focusedon US-based fundmanagers, he adviseson transactions,

compliance, regulatory issues,restructuring and, for some clients, acts asan outside in-house counsel advising onall aspects of their business. He alsoadvises institutional investors with respectto their investments in private investmentfunds.

Since joining the firm in 2008, Scanlannotes how the key concern of his clients arethe issues revolving around the tightenedcredit markets.“[They] are trying to figureout how to get liquidity, trying to get out ofilliquid investments and struggling to sellassets at a reasonable price to satisfyinvestor redemptions.”

One of the many solutions toredemption pressures that Scanlan hasutilized includes restructuring the feestructure of a fund to entice investors tokeep their capital in the fund in return forreduced fees. The recent slowing ofredemption issues is paving the way forScanlan to focus more on the pendingregulatory developments andgovernmental programs.

Former colleague and current seniorvice president at Neuberger Berman, DanaPawlicki, commends Scanlan for thecommitment he provides to his clients andhis work.“He approaches legal issues andhis clients with a balance that is notcommonly seen in many corporatelawyers.” Current Dechert partner, GeorgeMazin, concurs on Scanlan’s abilities.“Kevinhas begun to attract his own clientfollowing, including both start-up

JARAD

PERRY

KEVIN

SCANIANJOSHUA

PRESS




managers and institutional clients.”Prior to joining Dechert, Scanlan worked

for other large, international law firms.

EMMA SUGARMANManaging DirectorCapital Introduction, BNP Paribas New York, NYAGE: 39

Promoted tomanaging director inFebruary, EmmaSugarman transferredto New York to growBNP’s prime brokeragespace.

Providing strategicadvice to hedge funds and institutionalinvestors, Sugarman concentrates oninfrastructure, developing marketablestrategies and administration issues forfund managers and examining portfoliomanagement and strategies forinstitutional investors. Ascend Capital, LLCCFO, Ben Slavet, praises Sugarman’s advice.“She is someone I can always count on toget an informed view of trends in thehedge fund industry and an objective viewof our strategy” says Slavet.

Sugarman manages a 13 person team,who advise between 350-400 hedge fundclients with a regular base of 700-800institutional investors. Client JohnQuintanar, managing director for BeachPoint Capital Management notes Emma’sdedication to providing clear information.“She is extremely thoughtful, providesamazing guidance and time and time againhas demonstrated her ability to be mosteffective in capital campaigns” he says.

Sugarman also organizes events for theinvesting community, including an annualhedge fund investor symposium. Sugarmanis also one of the founding members ofAssociation of Women in AlternativeInvesting (AWAI), the west-coast basedorganization stemming from the specificneeds of women working in alternatives onthe west coast.

Before joining BNP (formerly Banc ofAmerica Securities), she held positions withadministration firm BISYS Hedge FundServices and Olympius Capital, a start upfund-of-funds.

JEAN-FRANCOIS TARDIFSenior Portfolio ManagerSprott Asset Management, Toronto, Canada AGE: 40EDUCATION: B.A. Business Administration,University of Sherbrooke, Quebec, Canada

Jean-Francois Tardifjoined Sprott AssetManagement (SAM) inNovember 2001.Recruited for his stockpicking ability andportfolio managementskills, he created and

led the Sprott Opportunities Funds, whichcurrently has approximately $400 million inassets under management.

Tardif explains his strategy as buyingstocks he likes and shorting the ones hedoesn’t.“It’s extremely simple, with nooptions or derivatives. I look for free cashflow, growing sales, margin expansion andbuying at low multiples”says Tardif.“I investonly in companies I understand andeverything is about risk and return. If youdon’t understand the business, then youcan’t assess the risk well and can’t assess therisk profile.”Tardif focuses on mostindustries with the exception of biotechand technology.

Before investing,Tardif spends timeresearching and analyzing the industry, aprocess which can take between a few daysand a few months – depending on theindustry.

Tardif has adjusted his funds to handlethe tumultuous markets.“We’re not asaggressive as we used to be, we’ve startedto invest in convertibles, [they have] veryattractive yields and features”Tardif says.Currently in the process of capitalpreservation, the Sprott OpportunitiesHedge Fund LP has an annualized returnrate of over 21% since inception in 2004.90% of the clients are Canada-based,including financial advisors, high-net-worthindividuals and institutions.The remaining10% are offshore clients, consisting of high-net-worth individuals and institutions suchas fund-of-funds and family offices.

Before joining Sprott AssetManagement,Tardif worked for INGInvestment Management, Inc. as a portfoliomanager, overseeing all of the small cap

investments, beating all relatedbenchmarks for these portfolios.

HARRY WULFSOHNDirectorStenham Advisors Plc., London, UKAGE: 39EDUCATION: B.Sc University of Manchester,United Kingdom

Joining to open anoffice in South Africa,Harry Wulfsohn set upthe institutionalbusiness division ofStenham and wascharged with buildingup the client base,

raising assets globally and establishing theGroup’s profile in new markets.

Wulfsohn outlines how he attracted newclients.“[We] started with bottom-up coldcalling, attending events, networking andalso building our profile by writing articlesand speaking at conferences.”Wulfsohn andhis growing team are currently focusingtheir attention on developing the brandfurther in South Africa and throughoutEurope, Latin America and the Middle East.

Over the past two years, Stenham hasseen only 10% redemptions and aninstitutional asset increase of 60-70%. Firm-wide assets under management are atUS$4.9 billion, split between diversifiedhedge fund portfolios and commercial realestate funds.The diversified hedge fundportfolios have a ten year annualized rateof return of 10% with a volatility of 4%.

Wulfsohn is working closely with clientsto ensure their investment goals match theircurrent portfolio strategies for the currentenvironment.They have also increased theirclient education, providing ‘detailed andnon-jargon’ information. Michael Fienberg,group managing director for Stenhampraises Wulfsohn’s investment approach andexpertise.“He bridges the gap between thetechnical investment side of the hedge fundindustry and that of servicing andaddressing the needs of investors.”

The Peregrine Group, a leading providerof wealth and alternative assetmanagement solutions, recently acquired51% of Stenham. Peregrine is listed on theJohannesburg Securities Exchange.

EMMA SUGARMAN

JEAN-FRANCOIS

TARDIF


HARRY

WULFSOHN


“Newedge” refers to Newedge Group and all of its worldwide branches and subsidiaries. Only Newedge USA, LLC is a member of FINRA and SIPC (SIPC only pertains to securities-related transactions and positions). “Newedge” refers to Newedge Group and all of its worldwide branches and subsidiaries. Only Newedge USA, LLC is a member of FINRA and SIPC (SIPC only pertains to securities-related transactions and positions).

Not all products or services are available from all Newedge organizations or personnel and restrictions may apply. Consult your local office for further details.Not all products or services are available from all Newedge organizations or personnel and restrictions may apply. Consult your local office for further details.

Dedicated services for hedge funds and CTAs. Multi-asset prime brokerage, cross margining Dedicated services for hedge funds and CTAs. Multi-asset prime brokerage, cross margining

tools, cutting-edge risk calculation, start-up services and in-depth market intelligence.tools, cutting-edge risk calculation, start-up services and in-depth market intelligence.

We work with you to develop customized solutions that match your needs. To help power We work with you to develop customized solutions that match your needs. To help power

your performance worldwide.your performance worldwide.

EXECUTION CLEARING PRIME BROKERAGEEXECUTION CLEARING PRIME BROKERAGE

We don’t believein one-size-fits-all.

DontBelieve_RisingStarsHF_215x279.ai 13.5.2009 9:50:53

Bleed Ads Template.indd 1Bleed Ads Template.indd 1 5/19/09 10:26:30 AM5/19/09 10:26:30 AM

global hedge fund leadership report

Documents