Institutional Investor's Alpha Magazine - April 2008 - (Page 44)

Top 50 Moneymakers ran nearly $4 billion. The 46-year-old manager began his career in 1984 as an investment banker and worked for Nomura Securities Co. and Merrill Lynch & Co. in Tokyo, New York and London. He has stayed out of the limelight, in part because he is based in Fort Worth, Texas. Some years ago, the self-effacing Kleinheinz called himself a “contrarian, opportunistic and valueoriented” macro investor. In 2007 he made money long in U.S. technology and energy; he had a sizable exposure to H shares, stocks of Chinese companies approved for listing in Hong Kong. burst. Late that year he began to heavily short subprime mortgage pools and riskier, heavily leveraged collateralized debt obligations. The move paid off in a big way in 2007. Burbank, 44, the managing member and chief investment ofﬁcer of San Francisco–based Passport Capital, steered its Passport Global Strategy fund to a 219.6 percent net return last year. Burbank, who founded the ﬁrm in 2000, also scored on long plays in energy and metals. Last year Passport’s assets soared from $1.2 billion to $4 billion. Burbank — who runs the Passport Global Strategy fund with portfolio managers Jim Cunningham and Walther Lovato — raised his management fee to 2 percent from 1.5 percent, but he kept his performance fee at 20 percent. Highbridge’s assets have more than quadrupled since the deal, reaching $29 billion at the end of 2007 (down from $37 billion at midyear). Investment performance was mixed at the New York ﬁrm last year. The $14 billion ﬂagship multistrategy Highbridge Capital Corp. fund, which Dubin and Swieca, both 51, oversee, was up about 7.5 percent. The $3.5 billion Highbridge Asia Opportunities fund returned 19 percent, and the $2 billion Highbridge Long/Short Equity fund soared 40 percent. But Highbridge’s $1.7 billion statistical arbitrage fund, like many quant funds, took a hit in August, and it dropped 14 percent for the year, while its $700 million eventdriven fund fell 13 percent. Still, Dubin and Swieca are expanding the business. Highbridge, which operates out of midtown Manhattan in ofﬁces just a few blocks from JPMorgan Chase, plans to launch an energy-driven hedge fund through Louis Dreyfus Highbridge Energy. 23 John Burbank III Passport Capital $370 MILLION John Burbank knew as early as 2005 that the subprime mortgage market was a bubble that would inevitably 23 T. Boone Pickens Jr. BP Capital Management $370 MILLION Charity Begins with Hohn hristopher Hohn, founder of the London-based Children’s Investment Fund (UK), didn’t make Alpha’s list of top hedge fund earners this year, but he could have. The estimated $600 million in performance and management fees he made in 2007 don’t count for our ranking only because they went straight to the Children’s Investment Fund Foundation. The charity, run by his wife, Jamie Cooper-Hohn, aims to “demonstrably improve the lives of children living in poverty in developing countries,” according to its Web site. Projects include health, nutrition and education initiatives. Recent grants went to Kenya and Malawi; the William J. Clinton Foundation also received funds. Hohn, 41, pledged 0.5 percent of his 1.5 percent management fee from the fund to the children’s foundation when he created the charity in 2002. But the former portfolio manager for New York– based Perry Capital has been on a performance tear of late and now relinquishes much of his performance fee as well. Last year alone he generated a 37 percent return on the $10 billion TCI after racking up gains of 40 percent in 2006 and more than 50 percent in 2005. He has funneled more than $1 billion to the children’s foundation, including about $460 million in 2006. Hohn has also become one of the world’s most aggressive activist investors. In 2005 he helped prevent Deutsche Börse from buying the London Stock Exchange, and last year he put Amsterdam-based ABN Amro in play when he proposed that the managing board of the undervalued bank actively pursue a “breakup, spin-off, sale or merger of its various businesses.” Hohn more recently urged the European Union to impose sanctions against Japan if its Electric Power Development Co. did not raise its dividend. — S.T. C T. Boone Pickens has made more money in his second life as a hedge fund manager than in his ﬁrst as a corporate raider. His earnings in 2007 came mostly from his $2.7 billion BP Capital Energy Equity Fund II at Dallasbased BP Capital Management, which specializes in energy investments and has $3.3 billion in assets. The fund returned a net 24.4 percent, and the ﬁrm’s $591 million BP Capital Energy Fund returned about 40 percent. Pickens, who turns 80 in May, made the mistake of shorting the energy market at the beginning of this year, but he has since bet on oil prices remaining high. 27 Noam Gottesman GLG Partners $350 MILLION 27 Pierre Lagrange GLG Partners $350 MILLION 25 Glenn Dubin Highbridge Capital Management $360 MILLION 25 Henry Swieca Highbridge Capital Management $360 MILLION Childhood buddies Glenn Dubin and Henry Swieca have continued to ratchet up the value of their minority stake in Highbridge Capital Management since selling 55 percent of their ﬁrm to JPMorgan Chase & Co. for about $1.3 billion in September 2004. Wonder why hedge funds go public? Take a look at GLG Partners, the London-based ﬁrm that was listed last year on the New York Stock Exchange. The deal reaped hundreds of millions for GLG’s partners and executives, including founders Noam Gottesman and Pierre Lagrange, and emergingmarkets specialist Greg Coffey. The listing took place through a reverse acquisition by Freedom Acquisition Holdings, a shell company that traded on the American Stock Exchange. (Freedom shareholders own roughly 28 percent of the GLG stock.) But even without the proceeds from the IPO, Gottesman and Lagrange each made $350 million in fees and returns on their investments in GLG’s funds. The ﬁrm had $24.6 billion in assets at the end of 2007, and its funds rose, on average, 19.3 percent last year. The Israeli-born Gottesman, 46, who 44 • INSTITUTIONAL INVESTOR’S ALPHA • APRIL 2008

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - April 2008

Institutional Investor's Alpha Magazine - April 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Here to Eternity The Good Guys: Voice of Hope Cover Story: The Kings of Cash Where the Money Is Into the Light Interview: Proceeding with Caution Strategies: A Convenient Truth Alpha Bytes: Village Voice Unhedged: Commentary: No Time for Complacency

Institutional Investor's Alpha Magazine - April 2008

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