Hedge Fund Industry Awards: Black-Tie Reconnaissance Mission

The hedge fund industry honored its most admired managers and investors last night (Wednesday night) in New York at Alternative Investment News’ Hedge Fund Industry Awards.  The event was a great success – even though Alpha Male lost out on the charity-auction bidding for a $8,500 Friday afternoon helicopter trip from Midtown to the Hamptons.  To add fuel to the bidding on that one, MC David Moore (the “world’s funniest CEO”) promised that the pilot would fly low over the heavily congested I-495 so “you can give the drivers the finger”.  While that did sound enticing, I promised my wife I would bail out if the bidding surpassed 85 bucks.

In any event, this was a tough assignment, but someone had to do it.  Here is what I have to show for it…

Industry (finally) recognizes Phillip Goldstein for “breaking” the SEC

Controversial hedge fund manager, Phillip Goldstein of Bulldog Investors, was honored last night by the hedge fund community as “Hedge Fund Leader of the Year”.  You may recognize his name as the man who challenged and beat the SEC in its attempt to regulate the hedge fund industry.

While this recognition seems to make perfect sense on the surface, it actually represents somewhat of a change of heart for an industry that was initially slow to line up behind Goldstein’s court challenge.  As Alpha Magazine reported in its July/August 2006 edition:

“Goldstein’s legal costs have amounted to $300,000.  He has paid most of this himself, although a few small hedge funds and funds of funds have stepped forward to offer financial assistance.  Goldstein admits to being a little disappointed that none of the large, well-known fund firms have offered aid or support, even though many, he suspects, supported his case.

“‘People agreed with us, but no one wanted to sign on as plaintiff,” he says.  “No guts, no glory”.

Whether or not you agree with regulating the hedge fund industry, Goldstein certainly showed a lot of guts to take on City Hall last year.  And last night he received the glory that, in some people’s minds, was a long time coming.

Canadians make up for losing Stanley Cup to the Anaheim Ducks

Canadians won both categories in which were nominated last night.  The $100 billion Ontario Teachers’ Pension Plan picked up honors for the best public sector pension plan and the Vancouver-based managers of the Weyerhaeuser pension plan won for best corporate pension plan.  While this may seem to make up for Ottawa’s loss to Anaheim in the recent Stanley Cup final (see posting), Canadian managers might beg to differ.  In a further knock against Canada’s small, but talented, hedge fund manager community, both of these awards were given to investors, not managers.  At least these Canuck managers can take heart that their continued lack of recognition means they can also continue to exploit pricing anomalies in Canada’s well regulated, yet less informationally efficient capital markets.

Venue apparently built by Scots

Last night’s awards ceremony was held in the historic and cavernous “Gotham Hall” at Broadway and 36th in New York.  Long ago, the massive main hall once housed the Greenwich Savings Bank.  In fact, not far above the main podium were the following clearly visible inscriptions – obviously designed to encourage investing in hedge funds (okay, maybe not hedge funds per se):

“There is no gain so sure as that which results from economizing what you have.”
“It is what we save, rather than what we earn that assures our competence for the future.”

If only the Greenwich Savings Bank offered a good fund of funds, it would surely have produced a lot of alpha during the depression…

London Replication Seminar vs. New York Hedge Fund Awards

Yet another “New York vs. London” story…After we posted a piece on the state of the so-called “hedge fund replication” industry on Wednesday, we were struck by the irony of now covering an event that celebrated all that is not replicatable.  Beside Bulldog and Crazy Canucks, last night’s other “un-replicatables” included:

  • Emerging Manager of the Year: ARCIM Advisors

ARCIM, an energy trading firm, raised $600m last year before soft-closing.  All indications are that its founder, Harry Arora, is a great manager.  Still, bad luck seems to follow this guy around.  As the program from last night’s event pointed out:

“…the energy trading firm made its debut last July shortly before Amaranth Advisors, Arora’s previous employer, imploded.  Amaranth’s problems, much like those of another former employer, Enron, had nothing to do with Arora.”

Sounds like a great fund – as long as you’re not superstitious.

  • Institutional Manager of the Year: Lyxor Asset Management

If gala attendee John Casey (Casey, Quirk) is right about the coming flood of institutional assets into the hedge fund industry, “manager of the year” and “institutional manager of the year” will soon be the same award.  But for now, this Soc Gen subsidiary (not to be confused with the Vegas casino “Luxor” – a whole other type of risk) won these dedicated “institutional” honors.

  • Fund of Funds Leader of the Year: Eden Rock Capital Management

This London-based firm more than doubled assets to $2 billion over 2006 (that’s “two billion dollars”), thanks in part to its focus on the increasing popular asset based lending (ABL) strategy.

  • Hedge Fund Launch of the Year: Kohlberg Kravis Roberts

A little start-up calling themselves “KKR” for short won as the “launch of the year”.  Apparently, their distressed fund, the KKR Strategic Capital Fund, scored $1 billion before it even opened last year (prompting Henry Kravis to repeatedly place his pinky to his mouth and say – in a diabolical voice – “one billion dollars!”).  Sure, this accomplishment may sound impressive, but a quick poll of those sitting at Alpha Male’s table confirmed this KKR outfit was likely just a one hit wonder…

  • Nonprofit Investor of the Year: Bowdoin College

Finally, the “Non-profit Investor of the Year” apparently figured out how to make, well, tons of profits last year by investing in hedge funds.  Located in Brunswick, Maine, a coastal town of 21,000, Bowdoin College’s $673 million endowment returned 18.1% in 2006, more than double the average US university endowment.  With all this publicity, it’s apparent that what happens in Brunswick no longer stays in Brunswick.

– AM

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