The 20 Rising Stars of Hedge Funds 2008

4. 4. SCOTT DOOLEY the backing of a large fund or platform, the boutique firm targets the countries of Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Russia, Turkmenistan, Turkey and Uzbekistan because he said he sees these markets as a good place to go in search of returns. Since its inception, the fund has generated more than 25% in returns and grown to $25 million in assets from $6 million. Cappello started the fund ‘from scratch’ while friends and family were advising him to look for a job in a large bank instead. He said his greatest accomplishment was not giving up when the start-up process was stuck because no prime broker wanted to work with Azerbaijan, where the fund’s research team is based.This was a substantial roadblock, as the fund’s strategy is achieving long-term performance through research. To tackle the challenge and grow the fund, Clemente focused on a variety of areas. The approach includes fixed income, stock picking and special situations, including pre-initial public offering investments and direct lending, he noted. “My vision for the firm is to become a leading provider of niche funds that deliver above average returns with low correlation to major market indices by investing in remote places and products where mainstream asset manager are absent,” he said. Cappello predicted that,over the next few years, more and more hedge funds with different strategies will surface because it will become more difficult for hedge funds to just rely on alpha to consistently outperform the market. Over the next decade, he said he sees himself working at an asset management company that manages niche products, particularly aboveaverage return strategies with a low correlation to market indices. SCOTT DOOLEY Managing Director Fusion Capital Management, Canonsburg, Pa. Age: 30 Education: Grove City College (B.S. in Finance); University of Chicago (M.B.A., anticipated in 2009) Mentors: Mike McCormick, President, BenchMark Financial Network; Dr. Timothy Mech, Professor of Finance, Grove City College Dooley started Fusion Capital Management with Cliff McNary in October 2006. As managing director of the firm, he co-founded and launched Global Fusion Partners, a global multistrategy fund, in May 2007. Dooley said launching the fund during such a volatile market period was a challenge, but he credited employing a rigorous risk management strategy and hedging against a market downturn with allowing him to do so successfully. “What it really comes down to is risk management,” he added. The fund’s strategy requires daily monitoring of a proprietary long/short gauge, with net exposure not to exceed 90%, Dooley noted.The 15-20 exchangetraded funds (ETFs) in the portfolio consist of about 2,000 underlying securities and provide diversification across the market. In addition, the fund uses multiple option strategies to provide downside protection and what Dooley described as a hedge against ‘tail risk.’ Risk is further mitigated using stress testing, position limits, scenario analysis and monitoring of each position, he added. Dooley also is a chief architect of the Independence Portfolio, a proprietary method of managing ETFs. He developed and maintained the various research methodologies and screens used in the ongoing management of the ETFs inside that money management program. Before founding The Sturgeon Investments, Cappello was an investment analyst in New York for Haussmann Holdings, a $3 billion fund of hedge funds he joined in 2004. Prior to that, he was a junior broker on Bear Stearns’ derivatives trading floor in New York and briefly was a financial analyst in HSBC’s Corporate Finance Advisory division and at the Investment Management division of Goldman Sachs, both in London. MAY 2008 HEDGE FUND RISING STARS 21

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The 20 Rising Stars of Hedge Funds 2008 Contents Looking Great for 2008 A Matter of Supply and Demand Return Performance Highlights Challenging Period 20 Rising Stars of Hedge Funds Mentors' Page

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