One Year Ago
»» Paul Singer's
Elliott Management instituted a performance fee for the
first time. Beginning in January 2010, investors in Elliott
began paying the traditional 2% and 20% fee structure that most
hedge funds charge. This was a significant departure for
Elliot, which had previously charged investors a 2% management
fee and all of the firm's operating expenses, along with a
1.75% fee at the time of both their entry and exit into a fund.
The new fees didn't hold back investors. The firm increased
assets to $16.9 billion as of July 1 from $14.1 billion a year
according to the AR Billion Dollar Club. As part of a
further institutionalization of the firm,
Paul Singer recently extended equity to three executives
and promoted one to serve as co-chief investment officer.
»» Israel "Izzy" Englander's
Millennium Management lost about 30% of its investor
capital after loosening its redemption terms to make it
easier for investors to withdraw capital, a move announced in
August 2009. Millennium received $3 billion in redemptions by
mid December. The firm's assets declined to $7.4 billion by
January 1, 2009 from $10.76 billion a year earlier.
Millennium survived as
strong returns kept investors in the fold. This year,
Millennium International was up 9.77% through
October, and the firm managed $8.1 billion as of November
Five Years Ago
»» Three Duquesne Capital Management alums-Kim
Walin, Sender Cohen and Gene Lange-
laid out the specifics of their soon-to-launched hedge fund
Venn Capital Management.
They said the global long/short equity fund would use bottom-up
research to target companies in North America, Europe, Japan
and developed Asia with market capitalizations of $2 billion to
$3 billion and focus on the consumer, technology,
telecommunications and industrial sectors, with the firm taking
the position that U.S. consumers can serve as leading
indicators of global trends.
Eighteen months later,
Venn shut down after producing lackluster returns with less
than $100 million under management. Venn's business plan called
for the partners to hold equal ownership and run the firm by
committee-a traditionally difficult formula for hedge-fund
startups. Venn lost about 1% between January and July 2006, its
first seven months in business. Its returns were said to have
not exceeded the single digits.
»» The now-infamous
Bear Stearns High-Grade Structured Credit Strategies fund
reopened to new investors. Fund managers Ralph Cioffi and
Matthew Tannin planned to take advantage of opportunities in
structured credit markets "both in the higher-rated tranches as
well as in the below investment grade classes," according to a
The fund, then managing $1.4 billion, planned to raise at least
an additional $250 million through the first quarter. Ninety
percent of the fund's portfolio consisted of structured finance
securities rated at least AAA and AA- and employed 10 to 1
leverage. The fund was up 8.28% through October 2005 and had
not suffered one losing month in 25.
The fund, of course, was one of two Bear Stearns subprime
mortgage-focused hedge funds to blow up, harbingers of the
investment bank's demise and of the 2008 financial crisis.
Tannin and Cioffi stood trial for misrepresenting the health of
the funds to investors but were
acquitted in November 2009.