Institutional Investor's Alpha Magazine - March 2008 - (Page 35) malized the process by holding a full-day off-site meeting at the historic Garden City Hotel — a onetime watering hole for the Astors and the Vanderbilts located just five minutes from Ivy’s original offices. To kick off the discussion, the firm brought in three veteran managers with whom it has money — Samuel DeRosa-Farag, president of Ore Hill Partners; Arthur Samberg, founder of Pequot Capital Management; and Paul Singer (no relation to Michael), founder of Elliott Associates. Each spoke for about 20 minutes. Singer, one of the four managers in Ivy’s very first fund, was his typically dour self, predicting that the current credit crisis had a long way to go. DeRosa-Farag, who spends the bulk of his time at Ore Hill working on new initiatives, including structured products, was bearish on the economy too. Samberg, although also concerned about the effect of the subprime credit mess, was the most upbeat of the three. He sees continued economic strength in emerging markets, powered by countries like China and Brazil. “Our big theme is emerging markets,” says Samberg. “There’s this enormous buildup in the middle class.” The managers’ outlook dovetailed with Ivy’s, says Hachemian: “We were pleased that they actually confirmed some of our allocation choices.” Ivy’s investment team expects the spike in volatility that began last summer to continue at least through midyear. Noris and Davies say that should be good for managers employing relative-value, tactical-trading and long-short equity strategies. They expect event-driven strategies like merger arbitrage, however, to face pressure because of the falloff in the number of deals and the difficulty in financing those that do manage to make it to market. Similarly, credit strategies are likely to continue to be challenged, despite the recent actions taken by the Federal Reserve Board to inject liquidity into the system. But whatever the strategy, picking the right managers is critical. “With the environment we’re in, you can’t have mediocre managers in your stable,” says Davies. What Davies, Noris and the rest of the firm’s senior management are less certain about is exactly when the changes they’ve implemented will translate into additional investment dollars. Still, Simon is encouraged by the recent meetings he has had with investment consultants, who have started to take Ivy off their watch lists and are considering it for new mandates. He says the firm is currently bidding for 15 investment mandates, representing more than $5 billion. “We made the necessary changes and tough decisions, and now our pipeline is more robust than it has been in 18 months,” says Simon. Unique liquidity. Start-up services. Unique liquidity. Start-up services. Commission management. Commission management.analytics. Advanced algorithms and Advanced algorithms and analytics. You may not think ITG when you think hedge funds. not a hedgehold not a hedgehold name name But may not think ITG when you think hedge funds. You the fact is, we've been serving many of the top hedge fund managersbeenover 20 years. of the top But the fact is, we've for serving many hedge fundinnovative technology, aggregated liquidity, We deliver managers for over 20 years. and a broad range of customizable solutions. We deliver innovative technology, aggregated liquidity, and a broadyour broker mix. You'll appreciate our Add ITG to range of customizable solutions. confidential, broker-neutral You'll appreciate our Add ITG to your broker mix.approach. For more information, please visit w.itg.com/hedge or confidential, broker-neutral approach. For more contact us atplease visit w.itg.com/hedge or information, hedge@itg.com or 800.858.4907. contact us at hedge@itg.com or 800.858.4907. END-TO-END TRADING SOLUTIONS™ END-TO-END TRADING SOLUTIONS™ PRE-TRADE PRE-TRADE Portfolio TRADE P O S T- T R A D E Management, Portfolio Optimization, Management, & Compliance Optimization, & Compliance Pre-Trade Analytics Pre-Trade Analytics TRADE Execution, Management, Execution, & Connectivity Management, & Connectivity Algorithmic Trading Algorithmic Trading POSIT ® Crossing POSIT ® Crossing P O S T- T R A D E Measurement & Analytics Measurement & Analytics Post-Trade Processing Post-Trade Processing www.itg.com ©2007 Investment Technology Group, Inc., member NASD, SIPC. www.itg.com 51507-56797 ©2007 Investment Technology Group, Inc., member NASD, SIPC. 51507-56797 http://www.itg.com/hedge http://www.itg.com
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