See GRAPEVINE on Page 15

Danish Pension Leans Toward Allocation BoostDanica Pension is considering a large increase in the amount of capital it keeps in

alternative investments, including hedge funds.The $50 billion operation, headquartered just outside Copenhagen, doesn’t have

a set target allocation for alternatives. But insiders said this week that they were looking at a plan to double those holdings from the current $1.5 billion.

The deployments would be spread out over the next few years, likely across a range of products. Right now, Danica’s alternative-investment portfolio is made up largely of private equity and infrastructure vehicles. Hedge funds account for $350 million of the total, encompassing about 10 single-manager vehicles and one multi-manager product.

Danica takes an opportunistic approach to investing in hedge funds, targeting equity-like returns but with half the volatility. It tends to look at “non-classic” strat-egies — for instance, a fund investing in a specific sleeve of U.S. mortgage-backed

See PENSION on Page 10

Wells Nipping at Heels of Major Prime BrokersWells Fargo has cracked Hedge Fund Alert’s annual ranking of the top 25 prime

brokers, which is led by perennial front-runners Goldman Sachs, Morgan Stanley and J.P. Morgan.

Wells’ debut stems from its purchase last year of Merlin Securities, which had been among the largest nonbank prime-brokerage operations. Wells’ 96 fund cli-ents are enough for a No. 14 spot on the league table, just behind more established players such as Barclays, BNP Pari-bas and Jefferies & Co. (see Page 10).

At the head of the ranking are Goldman, whose 1,777 fund clients are good for a 20.7% market share; Morgan Stanley (1,346 fund clients and a 15.7% share); and J.P. Morgan

See BROKERS on Page 10

Butterfield Fulcrum Looks Ripe for TakeoverFund administrator Butterfield Fulcrum is being eyed by a larger rival.A “top 10” administrator has been given right of first refusal to purchase Butter-

field, a Bermuda firm with $92.7 billion of assets under administration. Citco, State Street, SS&C Globeop and BNY Mellon are among the biggest players in the field. Butterfield is controlled by private equity firm BV Investment.

With only a few big players dominating the hedge fund-administration busi-ness, there’s constant pressure on small and mid-size shops to pursue mergers and acquisitions. Hedge Fund Alert’s Manager Database, which compiles infor-mation on SEC-registered fund operators and their service providers, shows eight firms with $100 billion or more under administration. Combined, they control 79% of the $3.9 trillion of hedge fund assets serviced by administrators. (The newsletter will publish its annual ranking of the top-25 fund administrators

See TAKEOVER on Page 13

10 TOP PRIME BROKERS

11 PRIME-BROKERAGE CONTACTS

2 Startup Pitching Unusual Fee Structure

3 Andurand Highlights New Approach

3 Manager Carves Out Credit Strategy

3 Knighthead Preps Real Estate Vehicle

4 Consumer Shop Reaching Out to LPs

4 Metacapital Readies Next Offering

5 Macro Venture Seeks Seed Investor

6 Law Partners Back Compliance Shop

6 Report Examines Charitable Giving

8 Art-Focused Hedge Fund Planned

9 ADV Form Inflates Some Fund Firms

9 Startup Advisory Focusing on Risk

14 Placement Agent Seeks Advisory Role

14 LATEST LAUNCHES

Thomas Curran, once a star trader at Deutsche Bank, has joined Fore Research & Management as a portfolio manager. Curran was among a raft of fixed-income traders who left Deutsche in April 2011 in response to a shift in the German bank’s compensation practices. He is believed to have generated more than $500 million of earnings for the bank in the preceding two years. Curran had been working at Rose Grove Capital, a hedge fund firm run by former Deutsche

THE GRAPEVINE

MAY 1, 2013

Manager Database Updated For fresh details on more than 2,000 hedge fund managers, sign in at HFAlert.com and click the Manager Database link on the Subscribers menu. For sign-in help, contact JoAnn Tassie at jtassie@hspnews.com or 201-234-3980.

Startup Pitching Unusual Fee StructureCredit-product investor MeehanCombs is attempting to

boost the assets of its debut hedge fund by offering a novel fee structure to early backers.

The Greenwich, Conn., firm launched its MeehanCombs Global Credit Opportunities Fund in March with $50 million of equity from BlackRock. Now, it is trying to raise another $50 million via a so-called founders share class with the same terms given to the asset-management giant.

Investors in the class initially would pay a management fee equal to 1% of assets and a performance charge representing 10% of gains. Once the fund reaches $500 million, however, the fees would drop to zero.

Sources said they couldn’t think of another hedge fund offering free management in perpetuity. “Not a bad deal,” one fund-of-funds manager said. “I have heard of similar deals but not one so dramatic as to reduce fees to 0/0.”

MeehanCombs believes the founders class is preferable to traditional seed-capital arrangements. For the firm, it offers the advantage of bypassing seed provisions that make it difficult for fund operators to buy back their management-company stakes. At the same time, the setup is more accessible to small inves-tors. For their part, seeders counter that they offer help with distribution and operational functions that startups often can’t handle on their own.

Once the founders class closes, MeehanCombs will offer Class-B shares with their own twist. Investors in that segment won’t be able to withdraw their capital for three years, and will pay a management fee of 1.75% and a performance fee of 17.5%. Because those backers can’t touch their money for so long, the managers are basing the incentive charge on three-year compounded returns — as opposed to the annual format used by most hedge funds.

MeehanCombs’ fund trades a variety of corporate credit prod-ucts in the U.S. and Europe, including investment-grade senior-secured debt and convertible bonds. Its overall performance was flat in March, with winning positions including notes issued by bankrupt airline AMR Corp. and communications-system com-pany Avaya. Losing positions included convertible bonds issued by RBS, which like other convertibles in Europe saw their values dragged down during Cyprus’ fiscal crisis.

MeehanCombs also runs a $20 million separate account for Hatteras Funds of Raleigh that focuses on European securities. Matt Meehan, Eli Combs and Jim Plohg started MeehanCombs a year ago. Meehan, the chief investment officer, previously worked at Eos Partners. It was there that he met Combs, who left in 2008 to oversee business development and strategy at Alden Global Capital. Combs holds the title of president at the new ven-ture. Plohg is chief operating officer and general counsel.

Also involved is an independent board of directors that includes Richard Foster, formerly a senior partner at McKin-sey & Co., and John Frawley, who used to be chief executive of fund-of-funds operator Merrill Lynch Investment Partners and chairman of the Managed Funds Association.

May 1, 2013 2Hedge FundALERT

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Andurand Highlights New ApproachAs he begins marketing his new fund operation to a wider

audience, Pierre Andurand is seeking to distinguish Andurand Capital from its predecessor, BlueGold Capital.

Andurand began trading his Andurand Commodities Fund on Feb. 1 with more than $100 million — most of it from BlueGold investors who decided to stick with the London-based manager despite losses in 2011 and 2012. More recently, Andurand and his marketing chief, Sara Corsaro, have begun talking to new client prospects. Two weeks ago, for example, they met with investors in New York.

Yes, they’re telling investors, Andurand’s new fund invests in oil derivatives and other commodities just like BlueGold. But Andurand is going out of his way to highlight the differ-ences. Take the opening page of his firm’s pitchbook, headed “Andurand Capital Versus BlueGold.” Item No. 1: “Less volatil-ity and lower risk levels than at BlueGold.”

It’s understandable that Andurand would want to empha-size both the similarities and differences between his new firm and BlueGold. In its first year of trading, 2008, BlueGold Global Fund posted an eye-popping gain of 209.4%, even as most hedge funds suffered double-digit losses. The vehicle gained 55% in 2009 and 12.8% in 2010, but then lost 34.8% in 2011 and 3.4% in 2012. In April 2012, Andurand and BlueGold co-founder Dennis Crema told investors they planned to liquidate the fund and shut down the firm.

BlueGold had more than $2 billion of assets at its peak, sug-gesting relatively few of those investors are backing Andurand’s new fund. The vehicle currently has about $230 million under management. As an enticement to his former clients at Blue-Gold, Andurand is offering to honor their original high-water marks.

Andurand Commodities Fund gained 15.7% in its first two months of trading, versus a 1.3% loss for the S&P GSCI Crude Oil Total Return Index. The fund was up 3.5% in February and a whopping 11.8% in March.

Andurand, a former Goldman Sachs commodities trader, is joined at his new firm by 10 of the 13 staffers who worked under him at BlueGold. He plans to hire an oil-market analyst in the near future.

Manager Carves Out Credit StrategyHudson Bay Capital is again using one of the portfolios

within its flagship multi-strategy fund as the basis for a single-strategy vehicle.

The new Hudson Bay Credit Opportunities Fund is designed to trade a range of performing and distressed corporate loans, including those involving bankrupt borrowers. It’s the second single-strategy offering to come out of the operator’s Hudson Bay Fund, following the September launch of its Hudson Bay IP Opportunities Fund.

Hudson Bay Credit Opportunities is based on a $250 million credit-product allocation within Hudson Bay Fund. It’s unclear

whether any of that money will move to the new fund from the flagship, or what the size of the single-manager vehicle will be at launch.

Marc Sole manages both the credit-product component of Hudson Bay Fund and Hudson Bay Credit Opportunities, which is in the early stages of marketing. In its investor pitches, Hudson Bay is citing Sole’s performance since joining the firm in 2011. Before that, he worked at Plainfield Asset Management and D.E. Shaw.

The creation of Hudson Bay Credit Opportunities and Hud-son Bay IP Opportunities reflects a desire by Hudson Bay to diversify its fund lineup, giving existing investors the oppor-tunity to increase their exposures to certain strategies while also appealing to backers who might not want a multi-strat-egy product. But unlike Hudson Bay IP Opportunities Fund, which buys technology patents and represents just a small slice of Hudson Bay Fund, the credit-product strategy has been a major focus of the flagship.

Hudson Bay Fund’s other main investment approaches are: event-driven and merger-arbitrage plays; volatility trading; and convertible-bond arbitrage. Hudson Bay now is expected to offer one or more standalone vehicles separately employing those strategies.

The New York firm runs $1.5 billion overall. It was founded in 2005 by former options trader Sandy Gerber.

Knighthead Preps Real Estate VehicleDistressed-debt specialist Knighthead Capital is setting up a

vehicle that would originate short-term loans for commercial property owners who have struggled to obtain financing from traditional sources.

The New York firm hopes to raise $100 million of equity for its Knighthead Special Situations Real Estate Fund, which would lock up investor capital for at least four years. The fund is on track to hold a first equity close by the end of the second quarter.

Since opening in 2008, Knighthead’s main business has been an event-driven credit vehicle that currently manages $2.9 bil-lion. The firm runs $3.5 billion overall, including money for separate-account clients.

The real estate fund represents a new twist for Knighthead, which plans to hire an existing team at Silo Financial to help manage the vehicle. Silo, a New York firm led by Jonathan Dan-iel, specializes in writing bridge loans and other short-term loans secured by commercial properties.

The fund’s liquidity terms will be somewhere between those of a typical hedge fund and a private equity vehicle. It will have a two-year investment period followed by a two-year “harvest” period. The capital will be put to work funding loans of $2 mil-lion to $20 million apiece, targeting distressed borrowers with few other financing options.

Knighthead is led by founders Ara Cohen and Thomas Wag-ner, who will serve as co-portfolio managers on the new vehicle along with Daniel.

May 1, 2013 3Hedge FundALERT

Consumer Shop Reaching Out to LPsConsumer-stock specialist Caerus Global is forming its sec-

ond hedge fund.Portfolio managers Brian Agnew and Ward Davis already

have started to line up early investors for their Caerus Global Select Strategic Fund. They’ll accompany newly hired mar-keting professional Jonathan Taylor as he visits investors in the U.S., Europe and Asia in the coming months as part of a broader capital-raising push.

Taylor, who arrived this month, previously worked under former Bear Stearns Asset Management executive Melissa Ko at Covepoint Capital, and before that raised capital for Yale Univer-sity’s endowment. At Caerus, he replaces Kristen Harris, who has moved to a part-time consulting role.

The marketing effort will focus on wealthy individuals, fam-ily offices, sovereign wealth funds and institutional investors. The plan is for the firm to launch its fund by the end of June, with Agnew and Davis supplementing outside contributions with some of their own capital.

The team is offering early investors the opportunity to opt into a founders share class that presumably carries lower fees than the main fund.

Caerus has been running the new fund’s strategy via a sepa-rate account since July 2011. That portfolio gained 1.2% by the end of that year, even as the Russell 2000 Index lost 10.5%, but

has since trailed the benchmark with gains of 6% in 2012 and 10.5% so far this year.

The strategy is a more concentrated version of the one used by Caerus’ only other hedge fund, Caerus Global Master Fund. That vehicle launched in 2009, and since then has produced average annual returns of 5-6%. It is typically 10-15% net long — compared to 50% for Caerus Global Select Strategic.

All told, Caerus runs $200 million. Davis, who founded the firm, previously was a founding partner at Trivium Capital and before that worked at Chilton Investment and Zweig-DiMenna Associates. Agnew previously worked in a proprietary equity unit of J.P. Morgan, and before that spent time at Morgan Stan-ley’s former FrontPoint Partners unit and Galleon Group.

Metacapital Readies Next OfferingMetacapital Management is designing a hedge fund that

would profit if interest rates rise, using mortgage-backed bonds as a key component of its strategy.

The vehicle, Metacapital Rising Rates Fund, is set for a sec-ond-quarter launch. It initially would purchase interest-only mortgage securities, planting the seeds for phase two of its investment approach — using the income from those positions to buy interest-rate swaps and eurodollar put options.

The idea is that values of those instruments would increase sharply if the Federal Reserve shifts course and begins raising rates. Using a $100 million portfolio as an example, Metacapital is telling potential backers that a one percentage point hike in short-term interest rates would translate into a profit of 15-33% for its fund. A two percentage point rise would bring a gain of 32-68%. The planned launch first was reported by sister publi-cation Asset-Backed Alert.

The initiative adds a new wrinkle to Metacapital’s mortgage-bond investment business, which already has been producing hefty profits for the New York firm and its clients. For example, the firm’s Metacapital Mortgage Opportunities Fund saw its assets swell to some $1.5 billion from $850 million last year while delivering a 41% return to backers — making it a stand-out in a field where many similar vehicles gained 25% or more.

Metacapital also runs a $150 million entity called Meta-capital Mortgage Value Fund that appears to have fared well since its launch last year. That said, the firm’s performance is expected to cool off as mortgage-bond values stop rising as fast as they have been over the past year or so. Indeed, the Metacap-ital Mortgage Opportunities vehicle posted a more modest gain of just 2.4% for the first quarter of this year and actually lost money in March — its first down month since September 2011.

Metacapital was founded in 2001 by former Lehman Broth-ers executive Deepak Narula.

May 1, 2013 4Hedge FundALERT

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Macro Venture Seeks Seed InvestorA global-macro startup in Geneva is seeking its first institu-

tional backer.Opus11 Capital entered discussions with potential backers in

recent weeks, getting in touch with seed-capital suppliers in the U.S. and Europe — one of which is considering a $20 million contribution. The goal is to have an investment in place by Oct 1.

Among the matters up for negotiation with prospective back-ers is whether Opus11 should continue trading through a sepa-rate account with Interactive Brokers that it uses to run some $3 million of internal capital and friends-and-family money. Alter-natively, it could launch a new vehi-cle. That entity could take the form of a commingled fund, possibly even a UCITS vehicle if Opus11 wins the support of a European investor.

The seed-capital supplier likely will receive a share of Opus11’s reve-nues in exchange for its support, and could get a stake in the management company.

Opus11 pursues a systematic long-only approach. The shop’s pitch is that it allocates capital among assets in various countries as if they were individual portfolios, drop-ping those that underperform in favor of others with more potential. At any time, it may seek exposure to equities, fixed-income products, currencies and commodities via exchange-traded funds, exchange-traded notes and futures contracts. The firm holds positions for an aver-age of three months.

Opus11 is led by David Foubard, who founded the firm at the end of 2011. He previously helped judge risk and select investments for Union Bancaire Privee’s funds of funds from 2008 to 2011, and before that managed funds at Alfi Gestion and Ixis Asset Management.

Foubard so far has assembled a staff of four, most recently bringing in Benoit Ruaudel about a month ago as head of marketing. Ruaudel previ-ously co-headed the hedge fund unit at Societe Generale Asset Manage-ment. Also on board are technology head Philippe Vincent, risk-manage-ment chief Jacques Ninet and Marc Slakmon, who is focusing on market-ing in North and South America.

Opus11’s portfolio, Opus11 Capi-

tal Global Diversified Strategy, launched in January 2012 with about $2 million and went on to gain 10.9% for the year. It is up 4% so far this year, with about half of the gain coming in April.

Once it has its seeder lined up, Opus11 plans to charge a man-agement fee of 1.5% of assets and a performance fee equal to 15% of profits for investors who commit less than $5 million. Those who contribute more, likely including the seeder, would pay 1% and 10%.

In addition to its long-only strategy, Opus11 has been devel-oping a long/short macro approach. But the firm wants to get its long-only product off the ground before focusing on a second offering.

May 1, 2013 5Hedge FundALERT

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Law Partners Back Compliance ShopA new compliance-consulting firm is offering its services to

hedge funds and commodity-pool operators.Sansome Strategies of San Francisco, which officially opens

its doors today, is owned by the partners of San Francisco law firm Cole-Frieman & Mallon, which has developed a sizable hedge fund practice since opening in 2009.

Sansome is led by managing director Jennifer Dickinson, a lawyer whose resume includes stints at Cole-Frieman & Mallon and hedge fund operator Standard Pacific Capital. Dickinson has hired one employee so far and expects to fill two more posi-tions by the end of the year.

Sansome was set up to help managers navigate a flood of new SEC and CFTC mandates. Until this year, for example, a private-fund exemption allowed most hedge funds to escape oversight of the CFTC. But under rules the futures regulator adopted last year, funds that trade more than a minimal amount of deriva-tives contracts now have to register — subjecting many man-agers to “dual registration” with both the CFTC and SEC. In addition to advisory work, Sansome is offering its services as an outsourced chief compliance officer.

This is the second time that law partners Karl Cole-Frieman and Bart Mallon have started a compliance-consulting business. In 2011, they launched Gordian Compliance, also of San Fran-cisco, but in December agreed to sell the firm to a management

team led by president Niel Armstrong.Dickinson worked at Gordian before joining Sansome. Her

employment at the $2.2 billion Standard Pacific coincided with Cole-Frieman’s tenure as the firm’s general counsel.

Report Examines Charitable GivingThe 2008 financial crisis not only changed the way managers

invest, but also how they give away their money.That’s one of the conclusions of a new report by the Alter-

native Investment Management Association exploring char-itable-giving practices across the hedge fund industry. The London-based trade group is set to release the report today.

If hedge fund philanthropy originally was associated with titans such as George Soros, Julian Robertson and James Simons, the financial crisis has spurred more of a cooperative approach among industry professionals. Examples include Rob Davis’ Hedge Funds Care, Stacey Asher’s Portfolios With Purpose and 100 Women in Hedge Funds. While some of these groups pre-date the financial crisis, they’ve increasingly come to rely on broad-based support from all corners of the industry.

“Given the smaller amounts of performance fees being col-lected by the industry in general following the financial crisis, it would seem that cooperative funding may be a more effi-cient way to raise donations in a post-2008 world,” according to a draft of the report. “The majority of the charitable initia-tives that have been set up by hedge fund professionals in the past four years . . . have drawn together many donors rather than a single source.”

The model for this approach was pioneered by Paul Tudor Jones, who founded the Robin Hood Foundation in 1988. In 2011, the charity gave away $146 million to dozens of organiza-tions focused on children’s welfare in New York.

Among U.K. firms, the report noted, a common mechanism for funding charitable giving is to allocate a fixed amount each year plus a percentage of a manager’s performance-fee revenue. This approach has been used by Aspect Capital, the Children’s Investment Fund and Man Group.

May 1, 2013 6Hedge FundALERT

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ARE NON-TRADITIONAL DATA SETS PART OF YOUR RESEARCH?BY STEPHEN MALINAK, GLOBAL HEAD OF INVESTORS ANALYTICS, THOMSON REUTERS

© Thomson Reuters 2013. All rights reserved. 1002930 0413

One of the many examples that jump out at me is our Smart Holdings model based on this ownership content, showing how to derive alpha from a data set that many people have struggled to use effectively. We take a very novel approach and analyze the buying and selling behavior of funds to determine what styles and security characteristics are in favor at a given point in time. Thomson Reuters ownership content is the industry-standard for depth and breadth of security, mutual fund, and investor coverage spanning more than 500,000 owners, 45,000 funds across over 70 countries.

Issues such as climate change, executive remuneration and employee rights are becoming as important as traditional metrics, that’s why having access to an objective and comparable database and analysis tools is key. Our ASSET4 provides objective environmental, social and governance (ESG) information based on 250+ key performance indicators (KPIs).

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ONE KEY TO OUTPERFORMING? ZIG WHILE YOUR COMPETITORS ZAG.For the hedge fund community, we have a broad range of data across major categories including macroeconomics, text mining, insider, short interest, ownership, options, and industry-specific data that frankly should be used more. We see time and time again that outperformance demands breaking away from the most readily available, commoditized data and measures that everyone else uses. It’s critical to consider these untraditional and underutilized data sets.

company that’s dependent on those drugs performs. We’re also expanding our estimates database to include many more industry-specific indicators in the banking, insurance, and energy industries. With traditional quant factors and classic company-level fundamental analysis, you would never get this kind of critical insight. This is a great example of how our vast data resources can give you a distinct advantage.

To learn more about how our unmatched depth and breadth of content, analytics and tools can help you outperform, contact our Hedge Fund team at hfcommunications@thomsonreuters.com.

Art-Focused Hedge Fund PlannedA New York art dealer and consultant is marketing a hedge

fund that would invest in works of art.Elizabeth Harrington has lined up capital from friends and

family over the past few months for Harrington’s Diversified Art Fund. She is now seeking a seed backer that would allow the vehicle to start out with about $20 million. The fund would buy high-quality art at mid-range prices, targeting “small gems” with a price range of $15,000 to $750,000.

A seed investor would receive a percentage of the overall revenues of the fund’s management company, Harrington Art Fund Partners, and would be eligible for a discounted 15% performance fee that is also being offered to others who get in before the launch. Later investors will be charged 20%. The manager also will take a standard 2% management fee.

Harrington has been advising corporations, hedge fund managers and other clients on art purchases since the 1970s through her firm, E.B. Harrington & Co.

The fund’s chief financial officer is Barclay Leib, who was head trader at Glenrock Asset Management until last October. Leib previously ran a number of multi-manager vehicles for Weston Capital. Harrington’s husband, Peter Barker, is chief operating officer of the fund. He formerly advised emerging-market tech-nology companies and worked as an insurance executive.

The fund’s premise is that art is an asset class that provides strong returns with lower volatility than financial markets.

Unlike other art-investment funds, which typically have a private-equity structure, Harrington’s fund promises poten-tial investors greater liquidity. However, the firm has set up an unusual two-stage redemption process to avoid forced sales of assets. Redemption requests must be submitted four months in advance. The manager can then sell holdings to meet the request if market conditions allow — or, if not, must agree to cash out the investor within one year. If the investor can’t wait, the manager will draw on a line of credit to pay the investor immediately, but at a 20% discount.

The firm plans to build a diversified collection of art, includ-ing paintings, sculptures, photographs and other works from various periods. It aims to have 30% of the fund’s assets in Impressionist and Modern art, 30% in the works of various American schools and the rest in other categories. The fund will seek to avoid costly art-brokerage fees by purchasing art directly from auction houses, collectors, dealers, artists and their estates. The works will either be held in storage or placed in exhibitions before being sold over time to museums, dealers or other collectors.

As is typical for a hedge fund, its performance will be mea-sured via annual valuations of its holdings — rather than waiting to book profits as assets are sold. It will value assets by averaging three appraisals on each piece of art. If the fund’s auditor questions one appraisal, it may be replaced by another. The fund will need approval from an investment committee if

See ART on Page 9

May 1, 2013 8Hedge FundALERT

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ADV Form Inflates Some Fund FirmsSome large fund-management firms appear bigger than

they actually are when measured by gross hedge fund assets reported to the SEC.

SAC Capital, for example, reported $50.9 billion of regula-tory assets under management in a first-quarter SEC filing. But the same filing, Form ADV, lists 22 vehicles it considers hedge funds, with gross assets totaling $75.4 billion.

How is that possible, considering gross hedge fund assets are ordinarily much less than a firms’ regulatory assets? SAC is one of a number of large managers that operate internal funds of funds for the purpose of allocating capital to other vehicles they run. As a result, some of those assets get double counted when adding up the gross assets of its funds.

SAC contends that Hedge Fund Alert’s annual ranking of the top 200 SEC-registered hedge fund operators overstates the size of the firm by relying on total gross fund assets. In this year’s ranking, published April 17, SAC held the No. 5 position, behind Millennium Management, Bridgewater Associates, Cita-del and BTG Pactual Asset Management. Had the ranking been based on regulatory assets under management, SAC would have appeared farther down the list.

Other fund operators whose total gross fund assets exceed regulatory assets under management include Citadel, with $107.6 billion of gross fund assets and $100.6 billion of regula-tory assets; Centerbridge Partners ($28.4 billion of gross fund assets and $22.2 billion of regulatory assets); and Two Sigma Investments ($26.7 billion of gross fund assets and $21.4 billion of regulatory assets).

Startup Advisory Focusing on RiskA securities-financing professional with both buyside and

sellside experience has opened an advisory shop catering to hedge funds.

David Geffen, whose resume includes positions at Ama-ranth Advisors, BlackRock and Goldman Sachs, plans to for-mally announce the opening of Geffen Advisors today. The San Francisco firm would advise both startup and established fund operators on a range of middle-office functions, includ-ing counterparty-risk management, cash management and the logistics of fund launches. Geffen also is offering his services as an outsourced chief operating officer.

The firm will place particular emphasis on counterparty-risk management, including all aspects of a manager’s relationships with its prime brokers. Geffen has more than 20 years of expe-rience in the field, most recently handling securities financing, futures clearing and counterparty relationships at BlackRock. At Amaranth, where he worked prior to the Greenwich, Conn., firm’s 2006 blowup, Geffen was in charge of managing relation-ships with banks and brokerages.

Before switching to the buyside, Geffen helped Goldman manage its counterparty risk with hedge funds. He worked in the bank’s global credit department under Craig Broderick, who is now Goldman’s chief risk officer.

Geffen Advisors also has an agreement with HazelTree, a New York advisory firm specializing in cash and margin man-agement, to market HazelTree’s services on the West Coast.

Art ... From Page 8

any acquisition would account for more than 10% of the fund’s value. Harrington is also offering to set up a separate share class that would buy tail-risk protection via out-of-the-money puts on broad market indexes.

Examples of past trades Elizabeth Harrington advised on include a Mark Rothko painting purchased in 2005 for $1.1 mil-lion and sold at the Art Basel show in Miami in December for $4 million; and a Norman Rockwell painting acquired for $1.7 million in 2002 that is comparable to works by the same artist that recently sold for up to $15.4 million.

A March report on the art investment business, issued by Deloitte, described the art-fund industry as “nascent,” with 83 funds managing $1.6 billion last year. That was up 69% from the previous year, largely due to new vehicles springing up in China, home to 58 of the funds with a combined $969 million of assets. The rest are in the U.S. and Europe. Most are long-only, closed-end vehicles, such as a $200 million fund run by London-based Fine Art Fund Group, headed by former Christie’s executive Philip Hoffman. A Kansas City firm called The Collectors Fund is cur-rently marketing its second vehicle, seeking at least $50 million to invest in works by 20th Century American masters.

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(1,339 fund clients and 15.6% share). J.P. Morgan picked up 43 funds since last year, while Morgan Stanley lost 39 — leaving J.P. Morgan within striking distance of the No. 2 spot.

The number of fund clients is derived from the newsletter’s Manager Data-base, which compiles regulatory filings by 2,173 fund operators registered with the SEC. Those managers employ a total of 126 prime brokers, including many smaller firms that execute trades for just one or two funds. When a fund reports more than one prime broker, full credit is given to each. Of the 8,573 hedge funds operated by SEC-registered managers, 2,247 employ more than one prime bro-ker and 3,780 funds don’t use any prime broker at all.

The ranking captures prime-brokerage relationships only among SEC-registered investment advisors — and thus under-states the size of brokerages that cater mainly to smaller fund operators. Merlin, for example, had about 500 fund clients when it agreed to be bought by Wells in April 2012. But a majority of those vehi-cles were run by firms with less than $150 million of gross fund assets — the cut-off for registering with the SEC.

The question for Wells is whether it will be able to build on Merlin’s business and eventually break into the ranks of the major prime brokers. San Francisco-based Merlin was led by founder Steve Vermut and his son Aaron Vermut. Following the takeover by Wells, however, they left to join peer-to-peer lender Prosper.com. The bank has yet to name a head of prime brokerage.

Also new to the ranking is HSBC, which launched a Euro-pean prime brokerage in 2009 but began a push in the U.S. only last year. The bank was given league-table credit for 18 fund clients, ranking it 24th.

Among major U.S. banks, Citigroup’s seventh-place rank-ing among prime brokers likely will add urgency to an ongoing reorganization of its hedge fund-servicing business. A source said the unit, led by Nick Roe, is under pressure to expand its market share, which slipped to 5.3% from 6.7% a year ago. Standing in its way are No. 6 UBS, with a 7.3% market share; No. 5 Deutsche Bank (8% share); and No. 4 Credit Suisse (10.3% share).

Pension ... From Page 1

securities or other structured credit products. It is willing to back emerging managers and has supplied seed capital in the past.

Danica invests in hedge funds worldwide, with an empha-sis on operators’ transparency and risk-management profiles, and negotiates for lower-than-standard fees. A 10-person team led by Peter Lindegaard manages its portfolio in-house, while sometimes drawing on the due-diligence and research resources of parent Danske Bank. In instances where the group can replicate a strategy on its own, it often forgoes fund invest-ments.

Danica offers a range of retirement and insurance products, with a 150-year history in those businesses. It is among Den-mark’s largest insurers.

May 1, 2013 10Hedge FundALERT

Top Prime Brokers Based on disclosures by SEC-registered hedge fund managers

Clients Number of Fund Clients As % of 1Q-13 1Q-12 Change All funds 1 Goldman Sachs 1,777 1,748 +29 20.7 2 Morgan Stanley 1,346 1,385 -39 15.7 3 J.P. Morgan 1,339 1,296 +43 15.6 4 Credit Suisse 882 845 +37 10.3 5 Deutsche Bank 689 632 +57 8.0 6 UBS 622 664 -42 7.3 7 Citigroup 458 428 +30 5.3 8 Bank of America 354 336 +18 4.1 9 Barclays 315 280 +35 3.7 10 Fidelity Investments 269 253 +16 3.1 11 BNP Paribas 237 283 -46 2.8 12 BNY Mellon (Pershing) 174 175 -1 2.0 13 Jefferies & Co. 157 154 +3 1.8 14 Wells Fargo 96 6 +90 1.1 15 Newedge 89 94 -5 1.0 16 BTIG 60 53 +7 0.7 17 Interactive Brokers 47 35 +12 0.5 18 Charles Schwab 30 37 -7 0.3 19 ConvergEx 24 20 +4 0.3 20 Cantor Fitzgerald 21 23 -2 0.2 20 Nomura 21 22 -1 0.2 20 RBS 21 20 +1 0.2 23 TD Bank 20 21 -1 0.2 24 HSBC 18 6 +12 0.2 25 ABN Amro 17 7 +10 0.2 SEC-registered funds 8,573 8,232 +341

PRIME BROKERS

Prime-Brokerage Contacts GLOBAL HEADS SALES HEADS CAPITAL-INTRODUCTION HEADS ABN Amro Marcel Jongmans

marcel.jongmans@nl.abnamro.com Jan Bart de Boer (Global) janbart.de.boer@nl.abnamro.com Brian Duff, Steve Doran (U.S.) brian.duff@us.abnamroclearing.com steve.doran@us.abnamroclearing.com Martin Frewer (Europe) martin.frewer@uk.abnamroclearing.com Adrian Rubin (Asia) adrian.rubin@au.abnamroclearing.com

(None)

Bank of America Stu Hendel stu.hendel@baml.com

Ted O’Connor (U.S.) ted.o’connor@baml.com James Orme-Smith (EMEA) james.orme-smith@baml.com Ben Williams (Asia/Pacific) benjamin.williams@baml.com

Rob Sachs

Barclays Harry Harrison harry.harrison@barclayscapital.com

Munir Dauhajre munir.dauhajre@barclayscapital.com

Louis Molinari louis.molinari@barclayscapital.com

BMO Financial Tony Venditti tony.venditti@bmo.com

Lino Morra lino.morra@bmo.com

Katrina Rempel katrina.rempel@bmo.com

BNP Paribas J.P. Muir (U.S) jp.muir@us.bnpparibas.com Matthew Pinnock (Non-U.S.) matthew.pinnock@uk.bnpparibas.com

Chris Lane chris.lane@us.bnpparibas.com

Tom Mahala Tom.Mahala@us.bnpparibas.com

BNY Mellon (Pershing)

Gerry Tamburro gtamburro@pershing.com

Aaron Steinberg asteinberg@pershing.com

Aaron Steinberg asteinberg@pershing.com

BTIG Justin Press jpress@btig.com Brian Petitt bpetitt@btig.com

Justin Press jpress@btig.com

Peter Tarrant ptarrant@btig.com

Cantor Fitzgerald Noel Kimmel nkimmel@cantor.com

Bob Sherry rsherry@cantor.com

Noel Kimmel nkimmel@cantor.com

Celadon Financial Daryl Hersch dhersch@celadonfinancial.com

Lance Baraker lbaraker@celadonfinancial.com

Daryl Hersch dhersch@celadonfinancial.com

Charles Schwab (Not provided) (Not provided) (Not provided) Citigroup

Nick Roe nick.roe@citi.com

Alan Pace alan.pace@citi.com

Chris Greer chris.greer@citi.com

Concept Capital Michael Rosen mrosen@conceptcapital.com Jack Seibald jseibald@conceptcapital.com

Frank Napolitani fnapolitani@conceptcapital.com

John Watras jwatras@conceptcapital.com

Conifer Securities

Dick Del Bello ddelbello@conifer.com Sal Campo scampo@conifer.com

Howard Eisen heisen@conifer.com

(None)

ConvergEx Prime Services

Douglas Nelson dnelson@convergexprime.com Michael DeJarnette mdejarnette@convergexprime.com

Ben Brown bbrown@convergexprime.com

Chris Edgar cedgar@convergexprime.com

Credit Suisse

Paul Germain paul.germain@credit-suisse.com

Jodi DeVito, Mike Wingertzahn (U.S.) jodie.devito@credit-suisse.com michael.wingertzahn@credit-suisse.com Kieran McCormick (Europe) kieran.mccormick@credit-suisse.com Myo Schollum (Asia) myo.schollum@credit-suisse.com

Robert Leonard robert.leonard@credit-suisse.com

May 1, 2013 11Hedge FundALERT

PRIME BROKERS

Continued on Page 12

Prime-Brokerage Contacts GLOBAL HEADS SALES HEADS CAPITAL-INTRODUCTION HEADS Cuttone & Co.

Donato Cuttone donatoj@cuttone.com

Keith Bliss kbliss@cuttone.com

Keith Bliss kbliss@cuttone.com

Deutsche Bank

Barry Bausano barry.bausano@db.com Jon Hitchon jonathan.hitchon@db.com

Scott Carter (U.S.) scott.carter@db.com Daniel Caplan (Europe) daniel.caplan@db.com Harvey Twomey (Asia) harvey.twomey@db.com

Anita Nemes anita.nemes@db.com Marlin Naidoo (Americas) marlin.naidoo@db.com

Dinosaur Securities Edward Reid ereid@dinogroup.com

Paul Becker pbecker@dinogroup.com Elliot Grossman egrossman@dinogroup.com

(None)

Direct Access Partners

Brian Stutman bstutman@daptrading.com

Brian Stutman bstutman@daptrading.com

Andrew Saunders asaunders@daptrading.com

Fidelity Investments

Thomas Tesauro thomas.tesauro@fmr.com

James Coughlin james.coughlin@fmr.com

James Coughlin james.coughlin@fmr.com

Gar Wood Securities

Robert Jersey bjersey@garwoodsecurities.net

Craig Gantar cgantar@garwoodsecurities.net

Robert Jersey bjersey@garwoodsecurities.com

Global Prime Partners

Julian Parker julian@globalprimepartners.com Kevin LoPrimo k.loprimo@globalprimepartners.com

Julian Parker julian@globalprimepartners.com Kevin LoPrimo k.loprimo@globalprimepartners.com

(None)

Goldman Sachs

John Willian john.willian@gs.com

Dean Backer (Global) dean.backer@gs.com Puneet Malhi (Europe) puneet.malhi@gs.com Shane Bolton (Asia) shane.bolton@gs.com

Dean Backer (Global) dean.backer@gs.com

Grace Financial Gerard Lennon glennon@gracefg.com

Tim Walters taw@gracefg.com

(None)

HSBC Paul Hamil paul.hamil@hsbcib.com

Chris Barrow chris.barrow@hsbcib.com

(None)

I.A. Englander & Co.

Fred Scuteri fscuteri@iaenglander.com Brett Yarkon byarkon@iaenglander.com

Brett Langbert blangbert@iaenglander.com

(None)

Interactive Brokers (None) Emmet Peppers (New York) epeppers@interactivebrokers.com Mike Domka (Chicago) mdomka@interactivebrokers.com Brett Goldstein (San Francisco) bgoldstein@interactivebrokers.com Gerald Perez (Europe) gperez@interactivebrokers.com Weijian Wang (Asia) wwang@interactivebrokers.com

Emmet Peppers epeppers@interactivebrokers.com

J.P. Morgan

Teresa Heitsenrether teresa.heitsenrether@jpmorgan.com

Paul Brannnan (U.S.) paul.brannan@jpmorgan.com

Alessandra Tocco alessandra.tocco@jpmorgan.com

Jefferies & Co. Glen Dailey gdailey@jefferies.com

Penn Miller-Jones rpmj@jefferies.com

Robert Becker rbecker@jefferies.com

Lazard Capital Markets

David Sachs david.sachs@lazardcap.com

David Sachs david.sachs@lazardcap.com

Will Greco will.greco@lazardcap.com

Maxim Group Seth Michaels smichaels@maximgrp.com

Kristi Marvin kmarvin@maximgrp.com

Kristi Marvin kmarvin@maximgrp.com

M.S. Howells & Co. Katrina Santa Maria ksm@mshowells.com

Kathy Maya kmaya@mshowells.com

(None)

May 1, 2013 12Hedge FundALERT

PRIME BROKERS

Continued From Page 11

Continued on Page 13

Prime-Brokerage Contacts GLOBAL HEADS SALES HEADS CAPITAL-INTRODUCTION HEADS Morgan Stanley

Alex Ehrlich alex.ehrlich@morganstanley.com

Ed Keller (Americas) ed.keller@morganstanley.com Warren Holmes (Europe) warren.holmes@morganstanley.com Mehdee Reza (Asia) mehdee.reza@morganstanley.com

Darren Levy (Americas) darren.levy@morganstanley.com Will Smith (Europe) william.j.smith@morganstanley.com Hugh Abdullah (Asia) hugh.abdullah@morganstanley.com

Newedge Jonathan Gane jonathan.gane@newedge.com

Marc Lorin marc.lorin@newedge.com

Duncan Crawford duncan.crawford@newedge.com

Nomura Chris Antonelli (Tokyo) christopher.antonelli@nomura.com Jeff Zorek (London) jeff.zorek@nomura.com

George Remnick (U.S.) george.remnick@nomura.com

Aditi Velakacharla aditi.velakacharla@nomura.com

RBS Jeffrey Howard jeffrey.howard@rbs.com

(None) (None)

Saxis Group Sohail Khalid sohail@saxisgroup.com

Sohail Khalid sohail@saxisgroup.com Robert Schatzman robert.schatzman@saxisgroup.com

Greg Holmes gregory.holmes@saxisgroup.com Roland Morris roland.morris@saxisgroup.com

Scotia Capital Patrick Blessing patrick.blessing@scotiabank.com John Stracquadanio john.stracquadanio@scotiabank.com

Kripa Kapadia (Canada) kripa.kapadia@scotiabank.com Mark Schilling (Europe) mark.schilling@scotiabank.com Al D’Onofrio (U.S.) alfredo.donofrio@scotiabank.com

Kripa Kapadia (North Amer.) kripa.kapadia@scotiabank.com Jesse Mosebye (Europe) jesse.mosebye@scotiabank.com

TD Bank Lionel deMercado lionel.demercado@tdsecurities.com

Steve Banquier steve.banquier@tdsecurities.com Peter Boffo peter.boffo@tdsecurities.com Victoria Juretic vicki.juretic@tdsecurities.com

(None)

TradeStation Prime Services

Rob Sackett rsackett@tradestation.com

Bob Marietta bmarietta@tradestation.com

Bob Marietta bmarietta@tradestation.com

Triad Securities Kevin Schultz kschultz@triadsecurities.com

Brett Markowitz (U.S.) bmarkowitz@triadsecurities.com Jason Tobias (non-U.S.) jtobias@triadsecurities.com

(None)

UBS

Reinhardt Olsen reinhardt.olsen@ubs.com

Chris Hagstrom chris.hagstrom@ubs.com

Mike Sales (London) mike.sales@ubs.com

Wells Fargo Tim Mullins tim.mullins@wellsfargo.com Walter Dolhare walter.dolhare@wellsfargo.com

(None) (None)

May 1, 2013 13Hedge FundALERT

PRIME BROKERS

Continued From Page 12

Takeover ... From Page 1

on May 8.)There’s also been talk that HedgeServ, which has $55 billion

under administration, is in play. But the firm insisted in a pre-pared statement that it intends to remain an independent ser-vice provider. “We have been winning business at the expense of many of our competitors. Our competitors have responded by spreading the rumor that we are about to be purchased.”

Butterfield Fulcrum formed in 2008 via the merger of But-terfield Fund Services and Fulcrum Group. In 2011, executives

Glenn Henderson and Tim Calveley purchased the firm with backing from BV. Henderson, the firm’s chief executive, over-sees a staff of 350.

Unless your company holds a multi-user license, it is a violation of U.S. copyright law to photocopy or reproduce any part of this publication, or forward it electronically, without first obtaining permission from Hedge Fund Alert. For details about licenses, contact JoAnn Tassie at 201-234-3980 or jtassie@hspnews.com.

Placement Agent Seeks Advisory RolePlacement agent Protocol Capital has begun offering an

advisory service aimed at helping fund operators sharpen their marketing efforts.

The New York firm has tapped former Cantor Fitzgerald senior vice president Melissa Greenberg to spearhead the new business, which it is pitching to hedge fund managers that don’t yet want to employ outside marketers. Greenberg, who arrived in March, will help managers develop pitchbooks and coach them on making investor presentations, with an eye toward

attracting the attention of institutional investors. She’ll also advise firms on how to shape and maintain their “brands.” Cli-ents will be charged an hourly fee, depending on the extent of the consultation.

Even as it gets the new business off the ground, Protocol will continue to seek placement-agent assignments. The firm cur-rently has contracts to raise capital for five funds.

Protocol was founded in 2009 by Alan Glatt, who previously held executive roles at Alpha Equity and Mariner Investment. In January, former Alphabet Management marketer David Rhudy joined Glatt as a partner.

May 1, 2013 14Hedge FundALERT

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... From Page 1

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May 1, 2013 15Hedge FundALERT

debt capital markets chief Hope Pas-cucci. Fore Research, led by founder Matthew Li, takes an event-driven approach to investing across a range of credit products.

Citigroup’s prime-brokerage unit has hired Michael Meade to head sales and capital-introduction functions on the West Coast. Meade is set to arrive in the bank’s San Francisco office in the next few weeks. He previously worked at Morgan Stanley, where he logged seven years in prime-brokerage sales — most recently as head of business develop-ment in the Western U.S. At Citi, Meade reports to global prime-brokerage sales chief Alan Pace and David Murphy, who heads sales in North America and South America.

A managing director has signed on with recruiting firm Robin Judson Partners. Erica Kim joined the New York operation last week from an in-house recruiting

position at $6.7 billion fund-of-funds operator Arden Asset Management. Her resume also includes eight years at Och-Ziff Capital, where she recruited all types of personnel, and three years at equity manager Colden Capital.

Shumway Capital, the family office of former hedge fund manager Chris Shumway, has added an analyst to its staff. Matt Bruch joined the Greenwich, Conn., firm from Hawkeye Capital. That New York firm, which invests in equity and debt, was running $819 million of net assets as of Dec. 31, according to a filing with the SEC.

An analyst is leaving York Capital to join Green Arrow Capital, a Millennium Management unit in New York that invests across a range of sectors. Erica Furfaro will start at Green Arrow this month. She’ll work for Rob Bovo, who runs a portfolio of technology, media and telecommunications stocks.

SAC Capital has added a healthcare-company analyst to its staff. Stephen Liou arrived at the Stamford, Conn.,

firm in March from New York venture capital shop WFD Venture, where he worked on deals and raised capital as a senior associate. Earlier, Liou evalu-ated real estate investments at Periousia Realty and spent time as a mergers-and-acquisitions analyst at J.P. Morgan.

Research firm Novus Partners has hired a senior associate. Joseph Peters started at the New York firm in April. He previously analyzed long/short equity managers for a diversified fund-of-funds portfolio at PineBridge Invest-ments. New York-based Novus is led by Ivy Asset Management alumni Stanley Altshuller and Basil Qunibi.

Estimize, a startup that compiles buyside analysts’ estimates of corporate earnings, has hired a marketing execu-tive to increase the number of hedge fund professionals who contribute their predictions to the firm. Amanda Mazzella joined the New York opera-tion last week as a senior vice president. She previously worked as an associate director in the institutional sales area of Paris brokerage firm Newedge Group.

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