EFTA00285853.pdf

APRIL 10, 2019 d www.HFAlertcom e und ALERT 5 OPERATORS OF ONUNE PLATFORMS 2 Niche Manager Launches Incubator 2 Wilcox Pulls the Plug on Cider Mill 2 Tourmaline In Talks With Suitors 3 End of the Line for Archer Capital 3 Minnesota Startup Gaining Traction 3 Australia Manager Touts 'Best Ideas' 4 Platform Pros Prep New Offering 8 Capital Flowing to Al Startup 10 Forte Offers Prime Services in US 11 LATEST LAUNCHES THE GRAPEVINE Thomas McKiernan joined Citadel Global Equities this month as a portfolio manager covering industrial-company stocks. Until September, McKiernan was at Alyeska Investment — a firm led by former Citadel Global Equities head Mind Parekh. McKiernan also has worked at Madison Dearborn Partners and Deutsche Bank. A sales and marketing executive has left Bridgewater Associates. Shake Rasheed had joined the Westport, Conn., firm in 2016 after stops at Lazard Asset Manage- ment and Citadel. Rasheed's resume also includes a long tenure at J.P. Morgan. His plans are unknown. Bridgewater is the world's largest hedge fund manager, with some $150 billion under management. CPP Investment Board hired Yan Kvitko this month to head emerging-manager investments. Kvitko had been at New Holland Capital of New York since 2006, See GRAPEVINE on Back Page Tiger Writing Bigger Checks for Seeding Deals Julian Robertson has increased the amount he's willing to invest with new and emerging fund managers. Robertson's Tiger Management, which has been seeding hedge funds for 20 years, typically deployed $20 million to $25 million per deal, usually in exchange for a cut of the manager's fee revenue. But its two most recent transactions were substantially larger. Tiger invested $50 million to $60 million in Yam Square Capital, which began trading on April I. And it provided roughly the same amount of "acceleration" capital to Stony Point Capital, whose 5-year-old fund previously had $48 million of assets, including leverage. The word is that Tiger now is willing to consider even larger deals. The increased check sizes reflect the maturation of the industry since Robertson Sas TIGER on Piga Field Street Shutters Fund, Lowers Headcount Global-macro heavyweight Field Street Capital has liquidated a fund that suf- fered crippling losses last year. The New York firm, founded in 2007 by former Lehman Brothers executive Rod Gams, finished returning investor capital from its Field Street Global Investments fund in the last several months. The vehicle had about $220 million under manage- ment at the start of 2018, but lost half its value in May due to a wrong-way bet on Italian debt. The wind-down leaves the firm with just one other vehicle: the flagship Field Street Partners, which had about $4 billion under management a year ago. The firm's headcount, meanwhile, has shrunk by about a third in the past year or so. Field Street is among the most highly leveraged firms in the industry, with gross assets of $73.6 billion as of Feb. 28 — down from $93 billion at yearend 2017. It's unclear whether the decrease was the result of redemptions, investment losses, Sea FIELD on Page 9 Online Platforms Catching On With Investors Operators of online managed account platforms appear to be capturing an increasing share of the hedge fund market, with combined assets that now exceed $100 billion. Hedge Fund Alert identified seven firms that use proprietary technology to sim- plify various aspects of investing in hedge funds, from research and manager selec- tion to portfolio monitoring and risk management (see listing on Page 5). While such platforms first appeared in the late 1990s, asset growth among some of the leading operators has outpaced the industry as a whole in the past five years. HedgeMark, for example, has seen its assets grow from less than $4 billion when it was acquired by BNY Mellon in 2014 to more than $16 billion today. During roughly the same period, InfraHedge's assets increased to $35.4 billion, from $15.2 billion. InfraHedge is a unit of State Street. ICapital Network, which launched in 2014, had about $8 billion invested through SIN PLATFORMS an Page 4 EFTA00285853 April 10, 2019 Niche Manager Launches Incubator A Paris fund shop that trades dividend futures wants to incubate managers running unusual strategies. Melanlon Capital plans to hire an unspecified number of portfolio managers and stake them with about $10 million apiece. If their strategies prove profitable over a period of about two years, Melanion would help them raise additional capital from outside investors — and possibly spin them off as free- standing fund operations. Melanion is targeting asset classes that don't fit comfortably in the portfolios of institutional investors — whether because they're illiquid, too complex or otherwise too risky. Such strat- egies typically appeal more to family offices and wealthy indi- viduals who aren't constrained by limits on concentration or leverage. "We derived this idea from our launch experience: said Melanion founder and chief investment officer Jad Comalr. "We couldn't fit in existing asset-allocation pockets. A lot of doors were closed to us for the wrong reasons: Melanion, which launched in 2013, presents itself as the first alternative-investment manager focused on dividend futures. Those instruments, which trade mostly on European exchanges, allow investors to bet on whether public companies will raise their dividend payments. Comair wouldn't disclose how much money Melanion manages. Melanion joins a small but growing number of hedge fund backers hoping to capitalize on investor demand for niche strategies. In the fourth quarter, for example, the asset-man- agement arm of BTIG began offering seed capital to new and emerging managers, with an initial focus on those running such credit strategies as bank loans, equipment leases and structured products. BTIG has backing from Vista Life & Casu- alty Reinsurance. Other investment firms focused on niche strategies include fund-of-funds manager Eagle's View Capital and multi-strategy fund operators Boothbay Fund Management and Veritlon Fund Management. Melanion is accepting applications for its incubation pro- gram at managers@melanion.com. •A Wilcox Pulls the Plug on Cider Mill Cider Mill Investments is shutting down. The $300 million-plus equity shop will return all capital to investors at the end of this month. Most of its 12 employees already have departed. While there's no official reason for Cider Mill's shutdown, volatile performance likely was a cause. The Greenwich, Conn., firm's Cider Mill Master Fund was up 11.1% in the first quarter, following a 10.8% loss in 2018 and gains of 12.2% in 2017 and 1.1% in 2016. The S&P 500 Index was up 13.7% during the first quarter, following a 4.4% loss in 2018 and gains of 21.8% in 2017 and 11.6% in 2016. Fundamental equity managers in general have Hedge Fund] ALERT struggled to remain relevant as they have broadly underper- formed the S&P 500 in both up and down years. Cider Mill launched in 2016 with $150 million. Its founder, Thomas Wilcox, had been running his own family office since 2011 — when his former employer, Shumway Capital, con- verted to a family office for Chris Shumway. Shumway Capital had identified Wilcox as the "single most profitable individual in our firm's history" after he bet against financial-company stocks in 2008, according to Reuters. Cider Mill, meanwhile, hired a number of former Shumway staffers. Among them: chief operating officer Ken Palumbo, analyst Jeff Nykun and trader Susan Suh. O 2 Tourmaline in Talks With Suitors Outsourced-trading shop Tourmaline Partners is seeking to sell part or all of its business. The Stamford, Conn., firm has been circulating a book describing its business for a few months. Sources said the idea may be to finance a capital-intensive expansion — a project that would be too small and risky to fund through traditional bank debt. To that end, an undisclosed private equity firm apparently has emerged as Tourmaline's top suitor. While it's unclear how large of a stake might be in play, sources said such a buyer could achieve a solid return even with a minority interest, assuming favorable terms. Rumors also were swirling last week that Tourmaline was about to strike a deal with Nomura, with the idea that such an acquisition would complement the bank's Instinet electronic trade-execution unit. But sources said recent financial troubles at Nomura make a deal unlikely. On April 4, for example, the Tokyo bank said it would cut $1 billion of costs while pulling back from some businesses. Tourmaline works mainly with fund managers that run $50 million to $100 million apiece. It handles full trading functions for some of those clients, while offering others supplemental assistance, help in special situations or customized in-house services. Tourmaline was founded in 2011 by Jonathan Goldstein, Daniel Groff, Aaron Hantman and Henry Higdon 3d, who earlier helped launch Williams Trading. The company has 36 staffers in Stamford, New York and London, including 27 traders. Tourmaline touts its status as a stand-alone trading busi- ness as offering an advantage over competitors owned by larger companies. About a dozen trading shops cater to hedge funds, split evenly between those two ownership structures. In Febru- ary, Wooden & Co. agreed to sell itself to Piper Jaffrey for up to $73.5 million. O Need to find the newest funds? Subscribers con go to the Databases section of FINklert.com and click on 'Latest launches.' EFTA00285854 April 10, 2019 End of the Line for Archer Capital I Hedge Fund) 3 ALERT Archer Capital is about to shut its doors after 14 years. The firm, which invested in the debt of distressed mid-size companies and pursued special-situation equity plays, told limited partners in November that it would begin returning their capital. That process was 80% complete in January and now is just about finished. Archer was running $1.3 billion of net assets at its peak in 2015. Its gross assets had fallen to $590 million at yearend 2017 and $407 million at yearend 2018. Most of that consisted of debt products held by the flagship Archer Capital Fund. The decision to disband resulted from a reluctance on the parts of portfolio managers Eric Edidln and Joshua Lobel to ask investors to approve a new fund structure they were consider- ing. Most of the firm's other 13 staffers have left, including chief operating officer Nell Wlesenberg. But chief financial officer Kevin Arps remains. The shop's New York office already has shut down, but a Beverly Hills outpost where Edidin and Lobel are stationed remains open. Archer's returns don't appear to have substantially deviated from those of similar fund operators in recent years. Archer Capital Fund was up 2.5% for the first 10 months of 2018, mod- estly outpacing the HFRI Event-Driven Distressed/Restructur- ing Index and the HFRI Event-Driven Special Situations Index. Its 12.7% gain in 2017 also beat the average of those bench- marks. The fund gained 4.5% in 2016 and lost 7.4% in 2015. Amid Archer's unwinding, Lobel started a separate com- pany called Focus RoQ Holdings in November. That operation invests in private enterprises in sectors including real estate, healthcare, aerospace and eSports, with an initial deal involv- ing a team in Blizzard Entertainment's Overwatch League. Edi- din has invested in some deals with Lobel. Lobel and Edidin started Archer in 2005. Lobel previously was a principal at Redwood Capital. Edidin co-headed credit- product investing at York Capital. O Minnesota Startup Gaining Traction Hunter Street Partners has landed anchor investors for its debut fund, which targets niche investments in financially stressed businesses and real estate. The Minneapolis firm seeks to raise $250 million of equity for Hunter Street Fund 1. The drawdown vehicle recently closed on commitments from its first two backers — a multi-billion- dollar foundation and a family office. A second close is penciled in for June. Meanwhile, the fund has made its first two investments, deploying $9 million for the purchase of a portfolio of com- mercial buildings and committing $10 million to a program that will provide housing for people with disabilities. And it has signed letters of intent for two more deals, in which it would pay $6 million for a deeply discounted pool of workers' com- pensation receivables and provide a $15 million senior-secured loan to a company that offers sales-training services. "Our strategy of smaller, off-the-run opportunities ... is res- onating with LPs seeking private-equity returns but concerned about market cycles and hyper-competition in more conven- tional strategies and larger deal sizes; Hunter Street partner Andrew Platt wrote last week in a note to prospective investors. The firm's management team, led by chief executive Neal Johnson, is made up of alumni from well-known Minnesota- based hedge fund operations including CarVal Investors, Pine River Capital, Varde Partners and Whitebox Advisors. •:* Australia Manager Touts `Best Ideas' An Australia-focused equity shop has stopped accepting capital for its highly profitable flagship fund, but continues to market another vehicle whose returns are no less impressive. Ophlr Asset Management of Sydney, which takes a long-only approach to picking stocks of mostly small- and mid-cap com- panies, is showing a 21.2% annualized return for its Ophir High Conviction Fund since inception in August 2015. The "best ideas" portfolio gained 6.9% in February and also was up in March. Ophir founders Andrew Mitchell and Steven Ng are mar- keting the high-conviction fund to family offices and wealthy individuals around the world, with assistance from investment director George CMralds. Meanwhile, the firm recently closed the subscription window for its flagship Ophir Opportunities Fund, which has produced an annualized return of 25.3% since August 2012. That compares to a 7.5% annualized gain for the S&P/ASX Small Ordinaries Accumulation Index, which tracks small-cap Australian stocks. In a letter to investors last month, Mitchell and Ng said the latest semi-annual reporting period for Australian companies was "somewhat disappointing; "The key takeaway after meeting with over 60 companies directly and a further 38 in group settings has been the continu- ing tough conditions facing businesses reliant on the underly- ing strength of the Australian economy and/or consumer," the letter said. But "while the outlook for the Australian economy near-term remains challenging, we continue to feel the broader small- and mid-cap equities space continues to provide attrac- tive investment opportunities:" Ophir's flagship vehicle typically holds 30.50 small-cap stocks, while the high-conviction fund is a more-concentrated portfolio of 15-30 small- and mid-cap companies. •:.• Need Reprints of an Article? Want to show your clients and prospects on article or listing that mentions your company? We con reprint any article with a customized layout under Hedge Fund Alert's logo — an ideal addition to your marketing effort. Contact Keit Hordiman of 201.234.3999 or khordiman@hspnews.com. Information on reprinted articles is also available on HFAlert.com in the "Advertise" section. EFTA00285855 April 10, 2019 Platform Pros Prep New Offering Two former Aon Hewitt Investment executives who had been developing a managed account platform for the consulting giant have teamed up with a former HFR executive to build one on their own. After Aon scrapped its Vision Hedge Fund Platform late last year, Rishl Awatramani and Paul Sylvia began work on a busi- ness called 4Alts Platform that would provide investors easy access to new and emerging fund managers. Joining them in the effort is John Kfimek, who served as president of HFR Asset Management before resigning in mid-2018. The Arlington Heights, Ill., startup aims to begin adding managers to its platform in the second quarter. It would join seven other firms that use proprietary technology to simplify the process of researching, selecting and monitoring fund managers across a range of alternative-investment strategies (see listing on Page 5). Marketing materials 4Alts has distributed both to managers and investors say the platform will offer "easier, less-costly and more risk-controlled access to alpha from emerging managers!" Among its features: relatively low minimum-investment require- ments and daily risk reports. 4Alts also touts a "fiduciary pos- ture" that sets it apart from most other platform operators. It's unclear why Aon dismantled its Vision initiative. By 2017, it had signed up at least 50 small and mid-size fund- management companies that were hoping to raise capital via the platform. While most were hedge fund operators, Vision encompassed other types of alternative investments including private equity and real estate vehicles. Vision charged a plat- form fee of 15 bp, on top of the manager? fees. Sylvia had been at Aon since 2010. He earlier worked with Klimek at HFR Asset Management, an arm of data tracker Hedge Fund Research that offers a variety of investable prod- ucts. Awatramani, who was head of technology for Aon's Vision platform, also spent time at HFR Asset Management, where from 2007 to 2012 he was a managing director for investment technology. Klimek had worked at HFR since 2004. •:• Platforms ... Fran Pagel its platform at yearend 2018. Since then, it has taken over the feeder-fund operations of both Bank of America and Morgan Stanley. As a result, iCapital currently services tens of thou- sands of investors with a combined S40 billion committed to hedge funds and other alternative-investment strategies. Global hedge fund assets, meanwhile, increased 18% to $3.1 trillion during the five years ended Dec. 31, according to HFR, while assets in funds of funds fell by about 8% to $621 billion. Joseph Bums, a managing director who oversees hedge fund due-diligence at iCapital, said more investors are recognizing the benefits of accessing private funds via electronic investment platforms — which make it easy for clients to create custom- ized multi-manager portfolios. "It improves the transparency, improves the liquidity, drives down the minimum investments, streamlines the process," Burns said. "Leveraging technology is ( Hedge Fund) 4 ALERT a key differentiator for the growth of our business!' The seven online investment platforms identified by Hedge Fund Alert currently host investors with a total of about $108 billion deployed mostly to hedge funds, with some exposure to private equity and other alternative-investment strategies. From 2010 to 2018, assets invested via managed account plat- forms increased at an annualized rate of 13%, versus 9% for the hedge fund industry as a whole, according to a report Credit Suisse published last year. The precise size and scope of the online-platform sector is difficult to measure because it encompasses firms with a wide range of business models and product offerings. Some, like Plat- ten* Strategies, offer a set menu of hedge fund managers, along with data and analytical tools investors can use to research the options. "We have conducted a rigorous due-diligence process on these managers and provide several means of accessing this manager information so investors can start their own research process," said Kettera founder Jon Stein. "Once an investor has decided on a strategy, we simplify the investment process by moving to an online system. Once an investor invests, they are able to monitor risks and see performance on a daily basis." Other platform operators, including InfraHedge and Hedge- Mark, take a more customized approach. InfraHedge, for example, allows investors to choose any manager they want, without limit to strategy or region. "The open architecture nature of InfraHedge helps inves- tors allocate to any manager in any jurisdiction, negotiate bespoke fees and terms ... and work with their service provid- ers of choice said Robert Vanderpool, president of InfraHedge's North American operations. In some respects, InfraHedge's business model has more in common with traditional multi-manager operations like Pacific Alternative Asset Management than it does with iCapital, say, or Kettera. Paamco also helps clients assemble customized portfolios of hedge funds. But to varying degrees, HedgeMark, InfraHedge and their peers put a big emphasis on technology. Lyxor Asset Management, for example, has an online portal called MyLyxorMAP.com that allows clients to monitor profits and losses, market exposures and tracking errors, plus perform stress tests and other risk-analysis functions. Lyxor, a unit of Societe Generale, offers access to 35 hedge fund managers run- ning strategies including long/short equity, long/short credit, event-driven, global macro and managed futures. SocGen was among a handful of banks and asset manag- ers, including RBC, that pioneered managed account platforms in the 1990s, creating "structured products" that offered lev- eraged exposure to hedge funds. The Lyxor Managed Account Platform launched in 2002. "Lyxor became the dominant player in the market," said Robert Picard, a former Infralledge president who now runs consulting firm Rumson Ridge Group of Rumson, N.J. "But the credit crisis and Bernard Medoff scandal conspired to undercut the growth of these businesses!" Then, around 2010, firms like HedgeMark and InfraHedge See PLATFORMS on Page EFTA00285856 April 10, 2019 ( Hedge Fund] 5 ALERT Operators of Online Platforms for Hedge Fund Investors Operator, Platform Contact Commitments Via Platform (Shill.) The Skinny Family Office Networks, FON Alts Andrew Schneider andrew@pbtoa.org Still-developing initiative of Family Office Networks, representing some 10,000 family offices globally. Plans to launch with an Initial 50-100 hedge funds, with a focus on small to mid-size managers running capacity-constrained strategies. FON members will get first crack, but platform will be opened to other investors down the road. HedgeMark Ben Yaffee ben.yaffee@bnymellon.com $16,000 Creates bespoke platforms for institutional investors, with virtually unlimited selection of strategies to choose from. Robust technology provides daily performance, exposure and risk metrics. Counts more than 100 clients. HedgeMark acquired by BNY Mellon In 2014. ICapttal Network Lawrence Calcano Icalcanoeicapitalnetwodccom 40,000 Agreed In March 2019 to buy Morgan Stanley's alternatives feeder-fund operation, lifting assets on (Capital's platform by more than 40%. Acquired Bank of America's feeder-fund operation in 2018. Currently offers access to 25 fund managers running strategies including long/short equity, hedged credit, event-driven, global macro and private equity. Due-diligence chief Joe Burns previously worked at Ivy Asset Management and Soros Fund Management. Launched in 2014. InfraHedge Rob Vanderpool rvanderpoolestatestreet.com 35,000 State Street unit, which launched in 2011, has more than doubled its assets since 2015. Allows investors to construct customized portfolios, with no limits on jurisdiction, strategy or manager selection. All assets are held In separate accounts or funds of one. Chief executive Andrew Allright previously worked at Man Group. Kettera Strategies, Hydra Jon Stein jsteineketterastrategies.com 125 Currently offers access to 44 managers of macro, managed-futures, long/short equity, FX and other liquid strategies, with relatively low Investment minimums. Managers charge same or lower fees as they do for individual separate accounts. Kettera maintains independence by charging only a platform fee, while avoiding conflicts of interest that can arise from sharing in managers' revenues, brokerage rebates and other sources of income. Lyxor Asset Management, Lyxor Managed Account Platform Dan Rizzuto daniel.rizzutoelysor.com 16,000 Societe Generale unit developed one of the first platforms for investing In hedge funds. Offers access to 35 funds running multiple strategies including event-driven, futures trading, global-macro, long/short credit, long/short equity and risk arbitrage. Via MyLyxorMAP.com, investors can view performance measures and access risk-management tools Including stress tests and tracking-error analysis. Willis Towers Watson, AMX Oliver Jaegemann oliverjaegemann@theamx.com 750+ Consulting giant launched Asset Management Exchange (AMX) in 2017 to give institutional clients easier access to hedge fund managers. Initially offered to clients in the U.K, with plans to roll out In the U.S. in 2019. Marketing pitch emphasizes reduced complexity and economies of scale that make It both easier and cheaper to Invest In hedge funds. EFTA00285857 April 10,2019 Platforms _Rem Page 4 emerged as "infrastructure plays," offering investors easy access to hedge funds through a managed-account format, Picard said. Compared to traditional multi-manager vehicles such as funds of funds, managed account platforms give investors more control when it comes to strategy and manager selection. An investment executive at a university endowment said they offer the "ability to hunt with a rifle rather than a shotgun — that is, gain exposure to specific opportunities rather than a general blank check." And in most cases, client capital is invested through separate accounts or "funds of one: rather than commingled vehicles. That's why platform operators often highlight transparency, flexibility and control in their marketing efforts. "The control and transparency afforded to investors provide the ultimate protection against Madoff-like risk: said Hedge- Mark chief executive Andrew Lapkln. "In addition, when inves- tors form and control the investment vehicle itself, managers have no ability to suspend, gate or otherwise impede redemp- tions:' The 4th Annual CREDIT RISK `-'..TRANSFER SYMPOSIUM'. 1.. .. . .April 25, 2019 [New York, Ntl Cl L. 4 • 111IIE tll 200+ CREDIT RISK INVESTORS. REINSURERS, AND GOVERNMENT ENTITIES CONFIRMED! Featured Keynote Speakers: David Brickman. President Freddie Mac Bryan Goodie. Principal Financial Analyst Federal Housing Finance Agency II401 Malloy Evans. Vice President Single- Family Credit Policy Fannie Mae Naa Awaa Tagoe. Senior Associate Director. Federal Housing Finance Agency Lead Sponsors: 41kim.r..t.., ) sec. tip! 'Arch at' ® Fannie Mae Freddie Mac SaskelAmerkee Verrill trete Guy CARPENTER www.imn.org/crt - For sponsorship opportunities, contact Chris Keeping at +1 212-901-0533 or ckeepingetimn.org ( Hedge Fund ALERT Some operators also advertise relatively low minimum- investment requirements. Investors can access managers on iCapital's platform for as little as $100,000, for example. And most platform operators tout reduced costs for inves- tors, though their fee structures vary widely. Some take a cut of the fees investors pay to the underlying managers, while others charge a platform fee. Some do both. Kettera's marketing pitch emphasizes the fact that its Hydra platform only charges a flat platform fee. "We do not derive revenue from brokerage rebates, administration fee-sharing, interest income or sharing in managers' performance fees: Stein said. "Some of our competitors have what we view as con- flicting revenue models:' Even as some platform operators have notched impressive growth in recent years, one major company retreated from the field. Aon Hewitt Investment had been developing a program called Vision Hedge Fund Platform to give investors access to new and emerging managers. But Aon suddenly scrapped the effort late last year. Now, two former Aon executives who were spearheading that initiative are in the early stages of building a new online invest- ment system called 4Alts Platform (see article on Page 4). 4. 6 Family co_ Private Office el 4Wealth Management Forum July 2.2•24, 2019 Gurneys Newport Resort & Marina, Newport. RI In the course of three days. family offices, Ovate investors. and imistment managers navigate their way through the chOPPY waters of the past recession. while continuing to explore the best ways to map out their portfolios. With over 1000 delegates there Is alleys an opportunity to meet potential clients. Discussions will cover a wide variety of hwestment topics Including direct investing. Impact irwestIng, noncorrelated assets, and many more. Come join us this My- the forecast calls for tun, networking, and favorable prospects for preserving your family's wealth. SPONSORSHIP & EXHIBMNO OPPORTUNITIES ARE AVAILABLE If you are Interested In attending. sconsalrg, speaking or MBA% at this event. please cell212532969S a small Infollopaigroup.mx REGISTER To recut% Ash us online et vnweepaIgicuo.net or email to et merkebrei$00,..."P-nti EFTA00285858 April 10, 2019 Capital Flowing to Al Startup A startup equity manager that employs artificial intelligence is attracting large amounts of capital. FORA Capital recently landed an unidentified limited part- ner that brought the San Francisco firm's total commitments to $300 million. The operation already had reported to the SEC in March that its lone fund, Fora Capital Partners, was running $116 million of gross assets for 13 investors. Sources said the inflows reflect strong early returns for FORA, which chief investment officer Stanislav "Stas" Shalu- nov and portfolio manager Posit "Joe" Petviashvili launched in the fourth quarter of 2018. The commitments also demonstrate that certain investors are willing to devote substantial capital to artificial-intelligence funds, despite deep skepticism in some circles about whether the strategy can deliver consistent profits. Little is known about the equity-focused strategy of FORA, which presumably would turn over positions frequently based on expectations that it would handle billions of dollars of trades annually. Also unclear is how FORA is defining artificial intelligence, given a description in Shalunov's Linkedln profile of an "Al fund that uses machine learning and mathematics" While artificial intelligence and machine learning often are used interchangeably, many view artificial intelligence as guid- ing broad decision-making processes and machine learning as suitable for narrower tasks. Only a few managers bill themselves as pure artificial-intel- ligence investors. Sentient Investment, which was among those operations, liquidated in the second half of 2018 amid poor performance. Others employ artificial intelligence as part of a broader mix of quantitative strategies. They include the high-flying Voloridge Investment, which was running $3.9 billion of gross assets at yearend 2018. The Eurekahedge Al Hedge Fund Index, which tracks just 13 funds, is showing an annualized return of 9.6% since 2011, ver- sus a 6.7% rise for the the Eurekahedge Hedge Fund Index. The Al index's only down year was last year, when it declined 5.3%. FORM chief operating officer is Jeffrey Bowers, who previ- ously worked at hedge fund managers Coastland Capital and Passport Capital. But neither Shalunov nor Petviashvili appear to have investment-management experience, and instead have spent their careers mainly as technology entrepreneurs. In addition to FORA, Shalunov runs an artificial-intelli- gence company called Clostra that he founded in 2016. He also created a widely used way to transfer data on the internet, co- founded messaging-application business Open Garden, served as chief executive of Prlonlc Labs and worked at BitTorrent. It is a violation of U.S. copyright low to reproduce ony port of this publication, or forward it electronically, for use by people who aren't covered by your Hodge Fund Alert license. For details about licenses, contact JoAnn Tassie at 201-234-3980 or isassierghspnews.corn. Hedge Fund ALERT Petviashvili founded a firm called NewsAlpha that uses machine-learning techniques to perform risk-factor and news- sentiment analysis in the stock market. He left in 2018. Earlier, Petviashvili founded technology firm Jaanix. O 8 Tiger... Frew Page i shuttered his own hedge fund in 2000 and converted Tiger to a family office focused on backing hedge fund startups. Before the financial crisis, when hedge funds had no problem charg- ing a 2% management fee, $25 million of day-one capital was enough to get a firm off the ground. That's no longer the case, now that the average management fee is closer to 1.5% and startup costs have risen sharply — especially for compliance and technology. Meanwhile, other seed-capital investors including Black- stone, Goldman Sachs and Paloma Partners have long shown a willingness to commit $100 million or more. Still others, including Stable Asset Management, routinely invest $50 mil- lion or more. Against that backdrop, Tiger's standard offer no longer looked so appealing. A spokesman for Tiger Manage- ment declined to comment. Robertson, who is 86, has backed about 50 hedge fund launches over the years. While many of those firms subse- quently bought out Tiger's interest or shut down, the 20 or so remaining funds run a combined $33 billion to $34 billion — with Tiger Global accounting for about two-thirds of the total. Separate from its seed-investment program, Tiger launched a fund in 2011 that deployed acceleration capital to six manag- ers it had previously seeded. That vehicle, Tiger Acceleration Fund, raised $450 million from outside investors — mostly cli- ents of Morgan Stanley. The fund, which has since unwound, invested about $75 million per deal. Yarn Square, led by Victor Ho, is the new home for an invest- ment team that previously worked at Sutton Square Capital. Sut- ton Square founder Ken Brody told investors last August that he was shutting down the firm for health reasons. Some of Sutton Square's investors were expected to follow Ho and his team to Yarn Square. Sutton Square was running $206 million, on a gross basis, as of Aug. 1, 2018, and the word was that Yarra Square had about $75 million of commitments as of the fourth quarter. Before Sutton Square, Ho worked at Conatus Capital and Ock-Ziff Capital. Yarn Square's investment staff also includes managing directors Arthuros Mangdolls, Jonathan Pines and Will Simonton. Like many Tiger seeds, the Yarra Square team has relocated to 101 Park Avenue in Manhattan, the home of Tiger Management. Stony Point is led by chief investment officer Richard Walters, formerly an analyst at JAT Capital. The New York firm invests in technology and consumer stocks. Walters is joined by former JAT colleagues Cameron Williams, who oversees research, and operations chief Matthew Zweig. Both left JAT in 2015, the year it closed. Tiger's seed investments are directed by chief investment officer Gil Caffray and president Alex Robertson, Julian Robert- son's son. O EFTA00285859 April 10, 2019 Field ... From Page 1 Hedge Fund near reduced leverage or some combination of those factors. Field Street Global Investments was holding a sizable long position in Italian debt when fresh concerns about the coun- try's political stability sent bond values plummeting in May 2018. The fund, which employed leverage of about nine times equity capital, lost 15% in the first three weeks of the month, then fell even more precipitously — for a one-month loss of 50%, Bloomberg reported. At the same time, a number of other prominent global- 9 macro shops including Brevan Howard Asset Management and Element Capital booked hefty profits in May because they had been short Italian debt. Field Street's professional staff has shrunk from 60 in the first quarter of 2018 to less than 40 today. Among the latest departures: client-relations manager Jesse Silver, who has since joined Mariner Investment; portfolio manager Kevin Breen, now working at Citadel; and portfolio manager Jayraj Chokshl, now at Brevan Howard. Fixed-income strategist Benjamin Mar- tens, rate-product trader Maximilian Niddam and research head Boris Senderovlch also have left in recent months. •:• CALENDAR Main Events Event Sohn Investment Conference SALT 2019 Gaining the Edge-Hedge Fund Conference Dales May 6 May 7.10 Nov. 4.5 Location New York Las Vegas New York Organizer Sohn Conference SkyBridge Capital Agecroft Partners Information www.sohnconferenCe.M6 www.sattconference.com www.apgainingtheedge.com Events in US Dates Event Location April 15-17 April 16 April 16 April 16 April 24 April 25 April 25 HFA Symposium: Top Hedge Fund Strategies New York April 29-30 Real Estate Family Office & Private Wealth Mgmt. Forum Dana Point, Calif April 30-May 1 Al, Blockchain & Cryptocurrency Forum May 1 Private Debt Deal Flow Summit May 2 HFA Reception: Miami Launch Celebration May 2-3 Finadium Investors in Securities Lending Conference May 6-9 Operations Conference & Exhibition May 7 Qualified Opportunity Zones May 8-9 Trading Show Chicago 2019 May 9-10 Institutional Capital & Cannabis Conf. May 13-15 Consensus 2019 May 15 Digital Asset Summit May 16-17 Al & Fintech Conference May20 Cap Intro: Alternative investing Funds West May 21.22 Battle of the Quanta May 22 Closed End Funds & Global ETEs Forum June 24 Context Summits West 2019 Private Debt Forum Inside Smart Beta & Active ETFs Organizer CSS/Ascendant 13D Monitor iGlobal Forum Mankoff Company MFA IMN Hedge Fund Assn. www.hedgefundassoc.org IMN www.imn.org Information compliancesolutionstrategies.corn www.13dmonitor.com www.Iglobalforum.com themankoffcompany.us www.managedfunds.org www.imn.org Ascendant Compliance Solutions Strategies Spring 2019 Miami Active Passive Investor Summit New York Independent Sponsors & Capital Providers Dealmakers New York After the Bell-Blockchain as a Disruptor in Global Mkts. New York Legal & Compliance Conference Credit Risk Transfer Symposium New York New York Hollywood, Fla. FLAIA www.fiala.org New York Miami New York Boca Raton, Fla. SIFMA www.sifma.org Chicago Chicago Terrapin wvntletrapinn.com Los Angeles IMN www.imn.org New York New York San Francisco San Francisco New York New York Los Angeles New York Boston New Yost Chicago New York New York 11816 www.iibigkom Hedge Fund Assn. www.hedgefundassoc.org Finadium www.finadlumc.com June 3 June 3.4 June 4 Financing, Structuring & Investing in litigation Finance June 11 ALTSCHI 2019 June 11 Advanced Topics in Hedge Fund Practices Conference June 13 TSAM New York To view the complete conference calendar, visit the Market section of HFAlert.com Hedge Fund Assn. www.hedgefundassoc.org CoinDesk www.coindesk.com Block Works Group Blockworksgroup.io Markets and Markets www.marketsandmarkets.com Catalyst Financial www.catalystforum.com Global Capital Acg. battleofthequants.com Capital Link www.capItallInk.com Context Summits www.contextsummlts.com Opal Group www.opalgroup.com KNect365 vnvw.knect365.com IMN www.imn.org Markets Group Morgan Lewis Osney Media www.marketsgroup.org www.morganlewis.com vnvw.tsamnet EFTA00285860 April 10, 2019 Forte Offers Prime Services in US Forte Securities launched a U.S. prime-brokerage unit on April 1. The New York group caters mainly to hedge fund manag- ers that run $5 million to $50 million, offering them services including execution of stock and options trades. It also handles some capital-introduction services and helps clients set up electronic-trading infrastructures. For trade clearing, Forte has formed an introducing-broker relationship in which it steers clients to Mine Asset Securities — a unit of Seoul-based Mirae Asset Financial that launched its own prime-brokerage unit in 2017. With a healthy balance sheet and a relatively small roster of accounts, Mirae has found appeal among fund operators that feel it can devote more atten- tion to them than the major prime brokers. Forte's group is led by Joseph Vencil, who returned to the firm in February as chief operating officer for its broader busi- ness in the U.S. Vencil previously was on board from May 2017 to December 2018 — with his exit briefly stalling the London Register with code 'HSI"' for 10% savings • I t t' r . INSTITUTIONAL CAPITAL •'{ & CANNABIS CONFERENCE (WEST) IMN Presents the 3rd Annual May 9-10, 2019 Los Angeles, CA For more Information, please contact: pglIfillantalmn.org 212-901.0564 I www.lmn.org/Ic3west ( Hedge Fund ALERT company's efforts to start a prime-brokerage business in the States. During his short absence, Vencil was working to launch a prime-brokerage group at R.F. Lafferty. His resume also includes a stint as head of prime services at the former Albert Fried & Co., now part of TD Bank. Forte Securities formed in 2008 as a conventional brokerage business specializing in equities, equity derivatives and bonds. The firm offers prime-brokerage services in the U.K. and Austra- lia, but until now hasn't been active on that front in the U.S. 10 Correction An April 3 article, "Bridgewater Installs Dalby as Finance Chief; mischaracterized the responsibilities of newly hired Bridgewater Associates chief financial officer John Dalby. He will oversee the firm's corporate finances, but not financing for its investment portfolios. That responsibility lies with Bridge- water's co-chief investment officers, Ray Dello, Greg Jensen and Bob Prince. O »<II> BattleFin Discovery Day Event 2019 www.BattleFm.com/events Battlefin »<//•> DISCOVERY DAY NEW YORK So Much Data. So Little Time. June 19-20, 2019 The Plaza, New York 212 201 5373 EFTA00285861 Monday, May 6, 2019 I David Geffen Hall I Lincoln Center I NYC April 10, 2019 I Hedge Fund] 11 ALERT LATEST LAUNCHES Fund Portfolio managen, Management company Strategy Service providers Launch Equity at launch (1111.) AFC Uzbekistan Fund Domicile: Cayman Islands Thomas Hugger and Scott Osherott AFC Frontier Capital, Hong Kong 85-23-904.1015 Equity: Uzbekistan and neighboring countries March 29 To view an past Latest Launches entries, subscribers can click on the Databases tab at tIFAlerLcom 24m ANNUAL Sohn Investment Conference The world-renowned Sohn Investment Conference is the original and premier investment conference. Since 1995, the Conference has brought together fresh insights and money-making ideas to benefit The Sohn Conference Foundation's work to end childhood cancer. &SRN IOUN0.110.1 Where Wall Street Unites to End Childhood Cancer REGISTRATION NOW OPEN sohnconference.org For sponsorship opportunities contact niceleegannfoodevents.com In Partnership with crmc EFTA00285862 April 10, 2019 THE GRAPEVINE ...From Page 1 and before that worked at Mt Brothers investments. The board oversees invest- ments for the C$386.5 billion ($290 billion) Canada Pension Plan - among the world's largest hedge fund investors, with an $18 billion portfolio. Elliott Management has a new head of human resources. Amy Yates previ- ously spent two stints running her own human-resources consulting firm, with a stop as Hutchin Hill Capital's chief of staff in between. She also has worked as Highbridge Capital's chief administrative officer and spent time at Ardor Capital. Portfolio manager Jeff Hires left Citadel unit Surveyor Capital in March to become head of public-market invest- ments for the University of Richmond's investment arm, Spider Management. Hires covered financial-company stocks at Surveyor, which he joined from affiliate Antigen Capital. His former employers also include %Hum Asset Management, Independence Capital Hedge Fund.) awn 12 Asset Partners and Partner Fund Man- agement. Spider manages the University of Richmond's $2.5 billion endowment and runs money for other nonprofit entities. All told, the Richmond, Va., operation had $4.8 billion of assets on June 30, 2018. Carlyle Group has hired a vice president for its opportunistic credit-product team. Jesse lieu, who focuses on the debt of industrial and materials companies, arrived in the Washington firm's New York office in March from Apollo GlobaL Hou also has spent time at Cttigroup. Legg Mason unit ClearBridge investments added an analyst to its technology, media and telecommunications stock team this month. Erica Furfaro previously covered the same areas at Millennium Manage- ment, and before that was at York Capital and Carlyle Group. Senior compliance officer Jonathan Haulier left Och-2Itt Capital this month to join ExodusPoint Capital. Hantler, whose duties at Och-Ziff included trade surveil- lance, also has spent time at Bridgewater Associates, UBS and Deutsche Bank. For- TO SUBSCRIBE YES! Sign me up for a one-year subscription to Hedge Fund Alert at a COS1 of 54,697. I understand I can cancel at any time and receive a full refund for the unused portion of my 46-issue license. DELIVERY (check one): 0 Email. 0 Mail. PAYMENT (check one): U Check enclosed, payable to Hedge Fund Alert. K Bill me. K American Express. LI Mastercard. U Visa. Account #: Exp. date: Signature: Name: Company: Address: City/ST/Zip: Phone: E-mail: MAIL TO: Hedge Fund Alert 5 Marine View Plaza #400 Hoboken NJ 07030-5795 www.HFAlert.com FAX: 201-659-4141 CALL: 201-659-1700 mer IAMennIum Management executive Michael Gelband launched ExodusPoint in June 2018 with $8 billion. The New York multi-strategy shop's staff has since grown to more than 270. Whitebox Advisors brought in Andrew Ruth in March as a credit-product analyst. Ruth most recently worked at Wayzata Investment from 2015 to October 2018, and before that was at Houlihan Lokey. Whitebox's investments are overseen by Paul 1Witchell and Robert Vogel. The Minneapolis multi-strategy firm had $9.3 billion of gross assets at yearend 2018. Marble Ridge Capital hired Gregory Pearson this month as chief financial officer. Pearson previously worked at Adler Hill Management and Gracie Asset Management. Marble Ridge, a New York distressed-debt shop led by Dan Kamen- sky, reported $1 billion of gross assets at the end of last year. Distressed-debt investor Knighthead Capital added a trader to its staff in March. The recruit, Brendan Wright, pre- viously was a leveraged-finance analyst at MetUfe. HEDGE FUND ALERT www.HFAlert.com Telephone: 201.659-1700 Fax: 201.6594141 Email: info@hspnews.com Howard Kapliolf Michael Bartley Jonathan Fallon Mike Frassinelll James Prado Roberts Andrew Albert Daniel Cowles Thomas J. Ferris Foderaro Ben Lebowitz Dan Murphy Mkhelle Lebowitz Evan Grauer Mary E. 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