Institutional Investor's Alpha Magazine - February 2009 - (Page 3)

Letter from the editor Redemption? EDITOR Michael Carroll EDITOR Michael Carroll EXECUTIVE EDITOR Michael Peltz MANAGING EDITOR David Schutt INTERNATIONAL EDITOR Tom Buerkle ART DIRECTOR Nathan Sinclair EDITOR-AT-LARGE Firth Calhoun ASSISTANT MANAGING EDITORS Tom Johnson ART DIRECTOR Irene Ledwith (Research), William Loob (Editorial Production), ASSISTANT MANAGING EDITORS Lewis Knox Sathya Rajavelu (Director, Research Operations Group), Steve Rosenbush Kutler (Global Technology and (Research), Jeffrey (Wall Street, Corporate Finance), Tracy Tjaden (International) Banking), Deborah F. McClellan (Editorial BUREAU CHIEFS Loch Adamson (London), Production), Barbara Rudolph (Money ManageAllen T. Cheng (Asia) ment) SENIOR EDITORS Steven Brull (Los Angeles), EUROPEAN EDITOR Tom Buerkle (London) Karl Cates, Jane B. Kenney (Editorial Research), Jo Wrighton (Paris) BUREAU CHIEF Kevin Hamlin (Hong Kong) SENIOR WRITERS Frances Denmark, Michael Shari SENIOR EDITORS Steven Brull (Los Angeles), STAFF WRITERS David Lanchner (Paris), Andrew Capon (London), Jane B. Kenney Imogen Rose-Smith, Julie Segal (Editorial Research) SENIOR ASSOCIATE EDITOR Tucker Ewing SENIOR WRITERS Deepak Gopinath, ASSOCIATE EDITORS Sivert Hagen, Justin Julia Leikin (Research Specialist), WeiQing Lu Schack (Research Specialist), Carolynn B. Tetro STAFF WRITERS Rich Blake, David Lanchner COPY CHIEF David Wray (Paris) SENIOR CONTRIBUTING EDITORS Fran Hawthorne, SENIOR ASSOCIATE EDITOR Tucker Ewing Harvey D. Shapiro, Stephen Taub ASSOCIATE EDITORS Emily Fleckner, Sivert CONTRIBUTING WRITERS Pam Abramowitz, Danielle Beurteaux, Phil Davis, Katie Gilbert, Hagen Udayan Gupta, Scott Martin, Neil O’Hara, COPY CHIEF David Wray Nick Rockel, Robert Rosenberg, Jaye Scholl, Henry Scott Stokes SENIOR CONTRIBUTING EDITORS Fran Hawthorne, Hal Lux, Harvey Deputy Copy Charles Smith COPY DEPARTMENT D. Shapiro, Chief: Bill Christophersen; Joan Warner (Tokyo), Stephen Taub, Copy Editors: Ingrid Accardi, Ruth Hamel CONTRIBUTING EDITORS Colin Barraclough, ASSISTANT TO THE EDITOR Elizabeth Simroe Lucy Conger (Mexico City), Jonathan Kandell, ART DEPARTMENT Deputy Art Director: Diana Panﬁl; Lois Madison Reamy, Kazuhiko Shimizu Associate Art Director: Anthony Scerri; (Beijing), Leah Nathans Spiro Senior Designer: Jennifer Klock; Photo Editor: Katie Constans; COPY DEPARTMENT Deputy Copy Chief: Jeff CranActing Associate Photo Editor: Frannie Ruch; mer Color Imaging Manager: John Miliczenko ASSISTANT TOCEO Gary Mueller CHAIRMAN & THE EDITOR Elizabeth Simroe GROUP PUBLISHERDeputy Art Director: Patrizia Bove; ART DEPARTMENT Christine Cavolina PUBLISHER Joy DeSanto Associate Art Director: Stephanie Lora; Photo Editor: PUBLISHER, INTERNATIONAL Spencer Wicks Anastasia Pleasant; Color Imaging PUBLISHER, ASIA Wendy GallagherManager: ONLINE Miliczenko John Hitchcock John PUBLISHER EXECUTIVE DIRECTOR OF MARKETING Louis Cassetta PRESIDENT & CEO Christopher R. Brown PRODUCTION DIRECTOR Brian Gill PUBLISHEROF FULFILLMENT Robert Tonchuk DIRECTOR Christine Cavolina CHIEF OPERATING OFFICER David E. Antin PUBLISHER, INTERNATIONAL Lisa Traeger Institutional Investor’s AlphaTM and AlphaTM, 225 Park Avenue South, PRODUCTION DIRECTOR Brian Gill 224-3171. New York, NY 10003; (212) 224-3300; Fax: (212) MANAGING DIRECTOR OF RESEARCH PRODUCTS © 2009 Institutional Investor, Inc. No statement in this magazine is toDenise Murrell be construed as a recommendation to buy or sell securities. Neither this publication nor any part of it may be reproduced or transmitted in any form or by AND OPERATIONS DIRECTOR OF FINANCE any means, electronic or mechanical, including photocopying, recording or by any information David E. Antin storage and retrieval system, without the prior written permission of Institutional Investor’s Alpha magazine. For reprints contact Institutional Investor’s Alpha TM and Alpha,TM 225 Park Avenue Dewey Palmieri (212) 224-3675; Fax: (212) 224-3563; e-mail: South, New York, NY 10003; (212) 224-3300; Fax: (212) 224dpalmieri@institutionalinvestor.com. Subscription hotline: 3171. (800) 437-9997; Overseas: (44 -20) 7779 8999 HEDGE FUND MANAGERS these days aren’t feeling the love. Their investors are angry and feel betrayed by managers who promised positive returns regardless of the direction of the market. Investors have been especially critical of funds that have restricted their ability to withdraw their money. The practice of putting up redemption gates, once taboo, has become widespread, prompting ﬁ ngerpointing and name-calling. “You’d have to lower me into the ground before I’d put up a gate,” Leon Cooperman told The New York Times recently. “Clients deserve to be able to withdraw their money.” Cooperman, who founded his hedge fund ﬁrm, Omega Advisors, in 1991, is reportedly suing another ﬁrm that didn’t let him redeem his investment. The hedge fund business wasn’t supposed to be like this. For years managers trumpeted their brand of investing as inherently superior to traditional, long-only methods, extolling the virtues of leverage and short-selling when used together for conservative ends (namely, capital preservation and uncorrelated returns). From the end of 1998 through early last year, that formula helped the industry quintuple in size, to nearly $2 trillion in assets, according to Chicago-based Hedge Fund Research, creating spectacular wealth for hundreds of managers in the process. In 2008, however, most funds — faced with exactly the kind of doomsday scenario from which they are supposed to protect investors — failed miserably. The benchmark HFRI composite index was down 18.4 percent, but the reality was probably much worse, as many of the poorest-performing funds either closed or stopped reporting to database providers like HFR. David Bailin, president of alternative investments at Bank of America Corp., told Alpha that he expects industry assets to fall to about $1.2 trillion by the time the dust settles (“The Constant Skeptic,” page 20). One ﬁrm that is not letting the recent troubles curtail its growth plans is London-based GLG Partners. In fact, as Senior Contributing Editor Stephen Taub reports in this month’s cover story, “The Undaunted” (page 24), GLG intends to capitalize on the pain by hiring away investment teams and purchasing small money managers outright as it expands its lineup of hedge funds and long-only products. On January 20, as Alpha was going to press, GLG announced it had hired the founders of Pendragon Capital, a Londonbased, event-driven ﬁrm that once managed more than $3 billion. GLG, which has had its own share of redemptions, hopes to pick up a few hundred million dollars in assets — what’s left after Pendragon’s funds fell about 40 percent last year. MICHAEL PELTZ EXECUTIVE EDITOR mpeltz@iimagazine.com FEBRUARY 2009 • INSTITUTIONAL INVESTOR’S ALPHA • 3

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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