By Ben Baris
It has been a long and acrimonious haul, but Tim Attias, 47, and Santiago Alarco, 49, both formerly of Rubicon Fund Management, started trading a hedge fund of their own this month. Canosa Capital, based in London, launched with about $300 million nearly a year after Attias and Alarco settled a lawsuit with their former employer for an undisclosed sum.
The two had been joint chief investment officers at Rubicon, but for 18 months starting in 2009 they filled in for their boss, Rubicon co-founder Paul Brewer, after he fell from a horse and suffered life-threatening injuries. In court documents Brewer accused the two of presenting an ultimatum on his return to work—give them control of the firm or they would leave—then making plans to start a rival firm. Attias, best known outside the hedge fund world for his 2001 fling with ex-Mick Jagger wife Jerry Hall, had prior plans to launch another fund called Sata with a GAM executive before the legal troubles thwarted him. But with all of that behind them, Attias and Alarco have secured seed capital for their macro launch from $16 billion Brummer & Partners, Sweden’s largest hedge-fund manager.
It has turned out to be a pretty good spring for ex-hedge fund employees who’ve been wanting to strike out on their own. Scott Warner, a managing director and equity portfolio manager at $8.6 billion fund-of-funds Pacific Alternative Asset Management Company in Irvine, Calif., believes improved market conditions have boosted confidence all around, among fund managers and their investors.
Former proprietary desk traders from banks account for two of the biggest launches that have been announced this spring: former J.P. Morgan equity prop trader Deepak Gulati’s Argentiere Capital and former Citi quant king Shakil Ahmed’s Princeton Alpha. But Warner says he is also seeing hospitable conditions for others. Those who came from prop desks have often been in a position of having to find new careers due to the Volcker Rule, which prohibits both U.S. banks and foreign banks with U.S. operations from trading their own accounts. But Warner is glad to see a rush of new managers who don’t, as he puts it, have “their backs pinned up against the wall.” Rather, he says, “they’re starting for reasons that are more positive and proactive rather than being reactive.”
James Berger, who left his job as a manager of GLG Partners’European Opportunity Fund last summer, is starting B1 Capital in Pfäffikon, Switzerland. Berger has a strong track record; under his watch the European Opportunity Fund gained 11.22 percent in 2008. He is reported to have enough seed capital and anchor investment to make his new fund, a long-short European equity strategy, one of the larger launches this year. Former SAC Capital manager Yip Ka-hay will be back in the hedge fund world after a four-year absence when Hong Kong–based macro strategy Bright Stream Capital opens its doors, reportedly in July. Yip was Steve Cohen’s first Asia-based manager at SAC, where he ran an Asia-focused macro strategy. He left in 2009 when the firm cut back its non-equity investments. He is starting his new fund with around $25 million of his own cash.
Startup managers without a strong track record might still find it nearly impossible to raise capital, says Roxanne Martino, CEO of $10 billion Aurora Investment Management in Chicago. It’s easier for managers from well-known funds, however. “If they leave the ship, investors might go with them,” says Martino.
Still, early-stage investors are taking a chance on the manager’s ability to thrive as an entrepreneur. Lately, says Warner, there have been enough managers breaking away that, “it speaks to me as a shift in the dynamic a little bit.”
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