| (Illustration by Luke Ramsey) |
It’s a tale of haves and have-nots. At first glance, the environment for new hedge fund launches in the Americas appears robust: Some 33 new funds raised $10.5 billion in the first half of the year, edging past last year’s total of $10.3 billion.
As was the case last summer, one megalaunch comprised nearly half the total, suggesting strong appetite for the right manager at the right time. Last year it was Sean Cullinan and his $5 billion PointState Capital. This year the Renaissance Diversified Alpha Fund, an equity-focused multistrategy fund headed by Peter Brown and Robert Mercer, lifted off with $3.5 billion in March and has since blown past $5 billion, helped by strong firmwide returns and the attraction of performance and management fees that are half the industry norm.
Beneath the surface, however, at least half a dozen pedigreed managers struggled to reach $100 million, generally considered the benchmark at which larger investors will consider putting in cash.
“There’s no question it’s more challenging now than it’s ever been, and that’s because the business has been institutionalized,” says Joseph Gieger, managing director for the Americas at $48 billion diversified asset manager GAM.
Former FrontPoint Partners portfolio manager Steven Eisman, for example, attracted a lot of attention for his long-short Emrys Partners, but that didn’t translate directly to fundraising. Emrys now manages just $54 million after a March launch.
Jeremy Schiffman and Andrew Immerman picked up $155 million from Goldman Sachs and TPG-Axon Capital Management for the March start of Palestra Capital Management, but they haven’t raised much since. Palestra is now at about $200 million. And three months after scoring $50 million from Stride Capital, LRV Capital still manages only that sum.
Even some big firms seemed to find the fundraising environment tricky. Pine River Capital Management, which manages $6.14 billion overall, picked up a relatively meager $100 million apiece for two February launches. Alex Roepers’s $1.6 billion Atlantic Investment Management raised the same for the June start of the CambrianGlobal fund.
