By Suzy Kenly Waite
For several years, brand-name hedge funds had to court new investments in a hostile environment. But now investors are writing big tickets again—and more hedge funds are lining up to woo them, including such blue-chip firms as Caxton Associates, Carlson Capital and Davidson Kempner Advisers.
Charlie Hannigan, who works in business development at Caxton, traveled to Chicago in early May to tout the Caxton Global Investments fund, a macro strategy, and met with investors in Minneapolis later that month. Last year, Caxton Global’s performance reached a turning point, gaining 9.32%, ahead of the AR Macro Index, which returned 6.24%. (It only gained 5.93% in 2009 against an 8% gain in the AR index.)
And despite the fund’s loss of 1.37% this year through April, as well as the impending departure of senior managing director and top fund manager Kurt Feuerman, founder Bruce Kovner doesn’t appear to have had trouble raising money. Caxton managed $11 billion as of May 6, up from $10 billion in January.
Carlson, which managed $6.1 billion in January, is marketing its multistrategy Carlson Double Black Diamond fund, and investor relations executives Tom Kuchler and Lauren Kohn will hit the road for Washington, D.C.; Atlanta; Portland, Ore.; and Seattle in the next few months. Clint Carlson’s Double Black Diamond finished 2010 up 8.65%, lagging slightly behind the AR Multistrategy Index, which returned 8.91%. It is up 3.96% through April.
Although the $15.3 billion Davidson Kempner closed its flagship multistrategy fund to new investment earlier last month, Davidson Kempner Distressed Opportunities and the Davidson Kempner International Fund are open. Nancy Karpf and Lindsay Elder are leading the marketing effort for the firm.
Distressed Opportunities returned 10.03% last year, lagging the AR Distressed Index, which was up 12.87%. The multistrategy International fund gained 9.55% in 2010, ahead of the AR Multistrategy Index, which was up 8.91%. Raising capital shouldn’t be too difficult—this year through April, the Distressed Opportunities fund is up by 6.18%, while the International fund has returned 3.78%.
“Investors are taking more risk, allocating more capital and feeling more confident about the prospects,” said an executive at a $700 million long/short credit hedge fund. “Most of the inflows are coming from the pension community, and the biggest beneficiaries are the large hedge funds.”
These latest fundraising attempts are part of a trend in the industry, particularly at top firms. “There’s a comfort level that comes from investing in big names,” said Jerry Davis, the chairman of the board of trustees at the $353 million New Orleans Employees’ Retirement System.
Millennium Management, Third Point Advisors and HBK Capital Management have raked in the cash this year. Izzy Englander’s Millennium raised $1.8 billion in the first quarter, bringing firmwide assets to $10.6 billion. Third Point added nearly $2 billion, and the firm now manages $7.2 billion. It is closing to new capital as a result (see story, page 10). Dallas firm HBK secured $520 million of new capital in the first quarter of 2011 and now manages $5.6 billion.
