Maverick Capital's Lee Ainslie Launches New Hedge Fund

January 04, 2013   Stephen Taub

The Tiger Cub has started taking outside money for Maverick Select, a long-short equity fund it launched internally last July.

   Maverick Capital's Lee Ainslie; photo: (Bloomberg)
Maverick Capital’s Lee Ainslie has launched a new hedge fund – Maverick Select.

The new fund was initially launched on July 1 mostly with internal money and began accepting outside money at the beginning of this year. According to sources, Maverick plans to cap the assets for this fund at around $1 billion.

The fees are pretty steep. If an investor agrees to lock up money for one year, the fund charges a 2.25 percent management fee and 22.5 percent performance fee. If the investor commits to three years, the fees drop to 2 percent and 20 percent.

"It is an intriguing product," says a hedge fund investor who has looked at the prospectus but has not committed capital at the moment. "It makes sense."

Ainslie is one of the prominent Tiger Cubs who previously worked for Julian Robertson's Tiger Management. Ainslie, along with Sam Wyly, launched Maverick in 1993. His flagship Maverick Fund was up 16 percent in 2012 after losing 14.7 percent in 2011, while Maverick Levered surged 32 percent last year after losing 30.7 percent the prior year.

Maverick Select will be a concentrated fund, containing 15 to 20 longs and 15 to 20 shorts. All of the stocks will be drawn from the overall Maverick portfolio. They will be those most highly ranked by MavRank, the firm’s proprietary MavRank quantitative stock analysis system, from a return and risk perspective, and all subject to liquidity and availability requirements.

The fund will be capped at $1 billion, principally so it does not impact the core funds, say those familiar with the product. Ainslie has stressed that MavRank is not simply a stock-picking system. Rather, he pointed out  in his 2011 year-end client letter, it takes the stocks that Maverick’s fundamental analysts have already placed in their portfolios and ranks them from a potential return and risk perspective.

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