In a contested bake-off with Larch Lane Advisors, Protege Partners was picked to manage the City of Richmond’s Hedge Fund Seeding Program.

More info is here http://bit.ly/oBW6nn

 ********  IvyPlus Fund Business Development Event – http://bit.ly/nAGMm7 ****** 

Ron Suber, senior partner and global head of sales and marketing for Merlin Securities, recently shared his thoughts with IvyPlus about how managers can more effectively market their products and strategies to investors. Ron’s presentation addresses some of the key points made in Merlin’s two most recent white papers: “The Spectrum of Hedge Fund Investors” and “The Business of Running a Hedge Fund.”

So what are Ron’s recommendations for managers looking to get to the next level of AUM? Simple: have your business in order, know your investors and tell your story to them effectively.

The presentation is available at http://slidesha.re/gL9Gqn, and Ron’s white papers are posted at http://merlinsecurities.com/whitepapers.

 ********  IvyPlus info next fund networking event – http://bit.ly/jN0k1i  ****** 

It’s a worst kept secret that alpha in hedge funds is frequently realized with smaller "emerging" managers as larger funds outgrow their strategy’s ability to generate non-correlated returns.   More institutional managers are acting on the realization that some of their larger funds have become more asset accumulators than alpha generators and are switching investment to emerging managers.  Calpers, NJ, NY and Illinois all have programs for emerging managers as does Duke University.  

PI Online reports that more institutional quality investors are taking deeper looks at emerging managers and their strategies to generate alpha.  

Albourne’s Richard Quigley says 

"We are seeing broad and significant interest in making increased allocations to emerging managers. Actual activity (i.e. funding) has been light, but we believe we are in the early innings”

Busara Advisors, a New York fund of funds received $150 million from a large California based pension fund.  

You can find out more here - http://bit.ly/jIoXpO

  ********  IvyPlus info – http://ivyplus.biz/index.html ****** 

Hedge Funds Review reports that fund seed capital for 2011 is expected to hit more than $5 billion.  They report "Blackstone, the largest player in the hedge fund seeding business, has been an early mover. Its second hedge fund seeding vehicle, Strategic Alliance II, launched in early 2010. It plans to seed around 10 hedge funds with upwards of $100 million over the next two to three years. 

You can find more info here - http://bit.ly/hRkEqn

 Meanwhile Infovest reports that though there is more money, there are fewer seeders.  

They also report, "Institutions are increasingly looking at seeding arrangements.  In the summer of 2010,  Rock Creek won a mandate from New York State Common Retirement Fund to manage the first installment of the pension’s new emerging manager program. Rock Creek is playing a key role in developing the emerging manager hedge fund portfolio, focusing on newer firms, firms with assets totaling less than $500 million, and women- and minority-owned fund management companies."

 You can find more info here - http://bit.ly/e5ns3N

 ********  IvyPlus March 8th Trusts, Estates and Alternatives Event –http://bit.ly/fu2VlG  ****** 

 Edoma Capital, launched by a former Goldman Sachs trader has raised more than $1 billion.  Pierre Henry Flamand, former head of GS Principal Strategies may have raised it’s capital from a large network of Goldman Sachs alum.  http://bit.ly/czKDrk

 ********  IvyPlus December 8th How to Run Your Hedge Fund as a Business Event –http://bit.ly/auce1t  ******* 

DE Shaw, a quant hedge fund famous for hiring math geniuses is laying off 10% of their workforce.  Zerohedge reports that AUM has fallen by $7 billion while institutional investor reports AUM is down from $30 billion to $21 billion.  Layoffs happen after gates have been dropped by DE Shaw to prevent investor redemptions as trading volumes have substantially decreased.  The New York Times reports that trading volume was down by 11% in July and 30% in August. Total AUM is down from $40 billion in 2008.  Fierce finance reports that "DE Shaw has been identified as a poster child for treating investors poorly in 2008 due to substantial gating that are expected to be drawn down over time." http://bit.ly/9pzT6F

The layoffs are seen as a sign of the times amid news that Wall Street bonuses will be reduced by at least 25% this year and layoffs are expected to surpass 40,000 worldwide.  

Meanwhile 3 Goldman Sachs alums: Eric Mandelblatt, Mark Carhart and Pierre-Henri Flamand expect to have raised at least $500 million each.  Bloomberg reports more here, http://bit.ly/axMjJC

  ********  IvyPlus December 8th How to Run Your Hedge Fund as a Business Event – http://bit.ly/auce1t  ******* 

Merlin Securities released their latest research article, this time focused on helping hedge fund managers identify, understand and market to the right investors.

The white paper, titled “The Spectrum of Hedge Fund Investors and a Roadmap to Effective Marketing,” analyzes the 10 most common types of hedge fund investors (from “Partners, Friends and Family” to “Sovereign Wealth”) along a spectrum from the least “institutional” to the most. The article then defines a four-stage marketing program designed to help funds identify and effectively reach the types of investors most appropriate for their respective funds.

The article includes two helpful charts and some interesting context on the current environment for hedge fund managers and their investors. Interesting reading as always from Merlin.

The full article is available here: http://merlinsecurities.com/pr/spectrum.pdf

  ********  IvyPlus October 19th Fund Business Development Event –  http://bit.ly/bED7IC  *******

Interesting reading from Heidrick & Struggles’ "Hedge Fund Industry Trends" report.  Key findings are:

(1) A pickup in merger activity

(2) Stronger asset flow into funds

(3) More transparency and liquidity

(4) An increase in hedge fund startups

(5) Aggressive hiring of marketing agents in the industry.  

More findings on the marketing side of hedge funds are:

(a) Marketing and Investor Relations professionals are in high demand

(b) European FOF marketers moving to single strategy funds

(c) More than 55 marketers changing firms with 30 firms aggressively seeking marketers

(d) Average 2009 total compensation ranges for marketing professionals included:

• Group Head: US$1,200,000 – US$3,000,000*

• Managing Director: US$1,000,000 – US$2,500,000

• Vice President: US$450,000 – US$850,000

• Associate Vice President/Senior Associate:  US$170,000 – US$500,000

You can find more here, http://bit.ly/bicYob

********  IvyPlus August 24th Fund Business Development Event –   http://bit.ly/aH0oi1 *******

Institutional Investor Magazine blogs Hedge Funds are outstripping PE firms in capital raising.  PE firms have only raised $50 billion in the last quarter while only investing $26.6 billion in that same period. Fundraising time lines now stretch from 12 to 18 months for mature funds. 

However, the two industries use different terminology to identify how much capital they have allocated.  Understanding that difference shows HF actively managed assets are far greater than PE actively managed assets.  You can find more info here, http://bit.ly/brcigz

The proper terms Hedge Funds use for the money they trade under their own account is Assets Under Management (AUM).  At times, hedge funds may be inactive in trading or be in a cash position but their assets are still held under their own account.  Again there is a secondary consideration which is how much of any hedge fund’s assets are "Managed Accounts" .  Managed Accounts encompass a broad array of assets held by an asset manager which may be traded by a hedge fund manager on a contractual basis.  In additions, there is proprietary trading which is done by major banks and other asset managers who separately trade their own book with potentially differentiated positions than those of their clients.  We assume the $2 trillion in AUM widely quoted for hedge funds comprises only assets actively managed in a fund by hedge funds and not Managed Accounts.

With respect to Private Equity the $1 trillion of capital commitments is different than AUM in that many cases the actual capital on call is not in a fund structure but can be called upon at a certain point when the PE firm needs the capital.  Under different legal terminology, capital on call can be called at different intervals of time.  Some contracts may stipulate such terms as being over a 3 – 5  year period, never to exceed 40% of the total capital committed over a 1 year period.   In other cases, the call period could be longer and investors may anticipated returns from their year 1 investment to feed a year 4 plus investment or follow on fund issuance.  Other times, capital on call could be capital with rights of first refusal such as in the case of search funds.  Moreover in most hedge funds AUM is constantly reinvested but with PE firms, other legal clauses can require that all assets invested are returned when a deal is exited.  There are few industry-wide figures on capital on call vs actual assets under management but we think PE firm capital call commitments have largely been upset by the massive post-2007 asset valuation decline and there are cases where PE firms are not making capital calls on Limited Partners if they have not returned capital to those same LPs in the same time frame.

When looked at side by side, HF actively managed AUM on a daily basis far outstrips PE actively invested AUM on a significant basis. 

 ********  IvyPlus June 15th Fund Business Development Event –  http://bit.ly/aToA1J  *******

HFMWeek reports that Hedge Fund Allocations are back to pre-crisis levels.  Pension funds continue to lead the charge into hedge fund investing. 

Mercer consulting reports,

“If you look at the demand this year compared to 2008 and early 2009, there has definitely been an increase,” said Robert Howie, a principal at investment consulting firm Mercer, which advises over 2,700 clients with assets in excess of £1.9trn.

The renewed confidence has been won by a series of industry reforms, aimed at creating better levels of oversight. “Most hedge funds have now tightened up their operations, they have multiple prime brokers and there is much less reliance on leverage,” said Howie.  You can find more here, http://bit.ly/cdRvec .

 Other signs of renewed interest come from the Ohio schools pension fund which plans to increase direct investment from 6% – 9 %.  More here, http://bit.ly/bMk1Mc

 Other news from Pension funds is to balance financial objectives with socially responsible investment moving away from real estate oriented deals that displace low income persons.  Calpers lost $500 million on its investment in Stuyvesant town.  More info here, http://bit.ly/9I62nx

********  IvyPlus June 15th Fund Business Development Event – http://bit.ly/aToA1J *******