Institutional Investor's Alpha Magazine - February 2009 - (Page 29)

At the beginning of the decade, GLG’s roster of clients expanded from wealthy Europeans to include more institutions, funds of hedge funds and private banks, which, says Gottesman, wanted more specialty funds. In addition to funds emphasizing equities, convertible bonds and market-neutral strategies, GLG launched niche vehicles focusing on individual sectors like technology and ﬁnancials, as well as on Japanese securities and credit. GLG’s growth plans, however, were nearly derailed when the U.K.’s Financial Services Authority began investigating in 2004 whether Jabre had improperly used nonpublic information about a 2003 convertible bond sale by Sumitomo Mitsui Financial Group to short the Japanese bank’s shares in advance of the debt offering. In August 2006 the FSA ﬁned the ﬁrm and Jabre £750,000 ($1.42 million) each. Jabre had left GLG in February 2006 and now runs his own Geneva-based firm, Jabre Capital. In December 2006, in a separate investigation, French regulators ﬁned GLG €1.5 million ($2 million) for alleged trading abuses related to a 2002 convertible bond sale by telecommunications equipment maker Alcatel. In both cases, GLG paid the ﬁnes, neither admitting nor denying guilt. Roman joined GLG in September 2005. An 18-year veteran of Goldman Sachs, Roman had spent the previous ﬁve years at the investment bank as global co-head of equities and prime brokerage. His hiring was considered a coup and helped boost GLG’s then-sagging credibility. Roman is credited with tightening management, oversight and compliance and with building the firm’s infrastructure. “The regulatory issues were not the sole or motivating reason for hiring Manny, but were one of the additional beneﬁts,” says Lagrange, who recalls phoning Gottesman one night and saying they should hire Roman, whom they had known for nearly two decades. “After Jabre left, Noam and I felt the ﬁrm needed to be seriously managed by someone in addition to us, and someone who had done it before.” Roman, who has a BA in applied mathematics from the University of Paris and an MBA in ﬁnance from the University of Chicago, co-manages GLG’s day-to-day operations. Lagrange, who has degrees in engineering and business from Belgium’s Solvay Business School, compares Roman’s role to having a McKinsey & Co. consultant inhouse, someone who doesn’t manage money and isn’t part of the ﬁrm’s legacy. Antonio Borges, chairman of the U.K. Hedge Fund Standards Board, who was vice chairman of Goldman Sachs International from 2000 to 2008, says Roman is especially well respected in the City: “Everyone in London listens when he speaks.” Despite the rapid growth in the number of funds at GLG, the ﬁrm’s overall performance always seemed to rely heavily on the hot hand of one manager. From 1997 to 2005 it was Jabre, who once managed about 30 percent of assets at GLG and accounted for 40 percent of its profits. Then there was Coffey, whose GLG Emerging Markets Fund racked up 60 percent and 50 percent returns in 2006 and 2007, respectively. In 2007, Coffey earned $300 million and, including stock, received a total compensation package worth nearly $600 million. Last spring the Australian native stunned GLG and its clients when he announced he was leaving in the fall in hopes of starting his own ﬁrm. At the time, Coffey was overseeing $7 billion of GLG’s nearly $24 billion in assets. When he left on October 31, forfeiting some $250 million in deferred compensation, the four funds he was managing were deeply in the red, including the once–$4.6 billion GLG Emerging Markets Fund, which was down a stunning 40 percent. Some critics suggest that Coffey’s success at GLG could Income Fund and Emerging Equity Fund. The duo previously ran emerging-markets sales and trading at Morgan Stanley in London. Before he moved to Morgan Stanley in 2002, AbdelMotaal managed an emerging-markets trading book for Tudor Capital UK in Epsom, Surrey. Turtelboom was an emerging-markets portfolio manager at Vega Asset Management in Madrid before joining Morgan Stanley in 2004. Warren Touwen, 36, arrived at GLG in July from Merrill Lynch & Co. as a portfolio manager to work with Esprit Fund co-managers Peter Harnett and Simon Savage. The Esprit Fund, launched in September 2006, uses an “alpha capture” system to create a market-neutral portfolio based on analyst recommendations from about 50 investment banks. Touwen, who developed the ﬁ rst fully automated alpha capture model at Merrill during his nearly ﬁ ve years there, will also work on expanding GLG’s global alpha capture capabilities. Galia Velimukhametova, 45, was brought in last summer by GLG as a portfolio manager to work with Steven Roth on the Credit Fund and Market Neutral Fund. A distressed-debt expert, she previously launched the London office of New York–based King Street Capital and was a member of that firm’s European investment committee. Before joining King Street in 2005, Velimukhametova spent nearly seven years at JPMorgan Europe in London, where among other things she did capital structure arbitrage. Anthony Burton, 37, has been co-managing global technology investments with Philip Pearson since joining GLG in September. Previously, Burton ran a global long-short equity fund at Merrill Lynch, focusing on the technology, media and telecommunications sectors. Andrew Knott, 28, also joined GLG from Merrill Lynch in September. The longtime equity research analyst has been charged with creating a new global energy fund, while also help- ing to manage energy investments across the ﬁ rm’s existing funds. At Merrill, Knott ran the European Oil & Gas Exploration and Production equity research team. Daniel Geber, 49, was hired by GLG a year ago as a portfolio manager in its New York ofﬁ ce to boost the ﬁ rm’s small- and midcap investment expertise. Geber, who once worked as an analyst at hedge fund ﬁ rm Omega Advisors, had been managing a top-ranked international small-cap fund for Epoch Investment Par tners, a New York–based, largely longonly ﬁ rm. Fabrice Bay, 4 0, moved to London from Frankfurt last summer when GLG hired him to lead its Consumer Fund team and co-manage the Capital Appreciation Fund alongside Ben Funnel. In his last job at DWS/Deutsche Asset Management, Bay managed €2 billion ($3 billion) in European equities mutual funds, as well as launched 130/30 products for institutional clients. — S.T. FEBRUARY 2009 • INSTITUTIONAL INVESTOR’S ALPHA • 29

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - February 2009

Institutional Investor's Alpha Magazine - February 2009 Contents Letter From the Editor Longs & Shorts Digging Out A Call to Mentor Dicey Detroit The Constant Skeptic Cover Story: The Undaunted What Were They Thinking? Dark Days in Greenwich True Stories from the Commodities Files Return of the Native The Quest for Cover Moving On from Madoff

Institutional Investor's Alpha Magazine - February 2009

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