»» Paulson protégé Paolo Pellegrini decided to return the investor capital in his global macro firm, PSQR Capital, by the end of September, citing the additional work necessary to profit from his bearish views.
The PSQR Master Fund was down about 11% through July 2010. The fund, which launched in April 2008 and opened to outside investors in December 2009, had previously produced substantial outperformance, gaining about 40% in 2008 and 61.6% in 2009. According to SEC filings, PSQR had raised at least $215 million before Pellegrini decided to return outside capital.
Pellegrini is best known for the short subprime bet he helped develop while co-managing the credit opportunity funds at John Paulson’s Paulson & Co.
An inquiry to PSQR’s investor relations department this week brought a confirmation that “PSQR is not accepting outside capital at this time.” Pellegrini has about 60% of his money in cash and is bearish on the currencies of major commodity exporting countries, including Australia and Brazil, according to comments he made to Bloomberg earlier this month. He did not immediately respond to a request for comment.
Five years ago
»» Leon Metzger, former vice chairman of Paloma Partners, began teaching a course about hedge funds at the Yale School of Management.
After 18 years at Paloma in Greenwich, Conn., Metzger signed up as an adjunct faculty member at Yale, NYU’s Stern School of Business and Columbia University’s Fu Foundation School of Engineering. He was also a lecturer at Cornell Financial Engineering Manhattan.
Amid his academic obligations, Metzger found time to teach the U.S. House Financial Services Committee about financial oversight, urging them in 2009 to pass regulations forcing hedge funds to disclose their positions and risk.
In particular, he called operational risk “the great unspoken-about danger.”
Metzger spoke to AR in a telephone interview this week about his life as an academic:
AR: You went from holding a top position at a prestigious hedge fund to being an adjunct professor working semester-to-semester in contract positions. Do you feel like you’ve taken a step down?
Leon Metzger: Particularly in times of crises, the students treat you with respect. During the week this summer when stocks were all over the place, I was teaching in Tel Aviv. We threw out all of the course materials and just asked ‘What would we do?’
In terms of going from being a senior executive, I tell my students I run the classroom like a hedge fund. The only exception is that expletives are not allowed in the classroom. And, obviously, no harassment is allowed in the classroom, either.
AR: Do you have any regrets about leaving the industry?
LM: As a teacher, the highs that I get from teaching are higher than any highs I’ve ever had in my professional life. Unfortunately, it’s not a consistent high.
