Institutional Investor's Alpha Magazine - May 2008 - (Page 3)

Letter from the editor Bigger Than Ever EDITOR Michael Carroll EXECUTIVE EDITOR Michael Peltz EDITOR Michael Carroll INTERNATIONAL EDITOR Tom Buerkle MANAGING EDITOR David Schutt U.S. EDITOR Jeffrey Kutler ART DIRECTOR Nathan Calhoun EDITOR-AT-LARGE Firth Sinclair ASSISTANT MANAGING EDITORS Peter Carbonara ART DIRECTOR Irene Ledwith (Money Management), Tom Johnson (Research), ASSISTANT MANAGING EDITORS Lewis Knox William Loob (Editorial Production), Sathya Rajavelu (Director, ResearchTechnologyGroup), (Research), Jeffrey Kutler (Global Operations and Tracy Tjaden (International) Banking), Deborah F. McClellan (Editorial BUREAU CHIEF Allen T. Cheng (Asia) Production), Barbara Rudolph (Money ManageSENIOR EDITORS Loch Adamson (London), ment) Steven Brull (Los Angeles), Karl Cates, EUROPEAN Kenney (Editorial Research), Jane B. EDITOR Tom Buerkle (London) Jo Wrighton (Paris) BUREAU CHIEF Kevin Hamlin (Hong Kong) SENIOR WRITERS Frances Denmark, Michael Shari, SENIOR EDITORS Steven Brull (Los Angeles), Andrew Capon (London), Jane B. Kenney STAFF WRITERS David Lanchner (Paris), (Editorial Research) Imogen Rose-Smith, Julie Segal SENIOR WRITERS Deepak Gopinath,Ewing ASSOCIATE EDITOR Tucker Justin Henry Teitelbaum Schack ASSOCIATE EDITORS Sivert Hagen, John Livingstone, WeiQing Lu (Research STAFF WRITERS Rich Blake, David Lanchner Specialist), Timothy Roberts (Research Specialist), (Paris) Carolynn B. Tetro SENIOR ASSOCIATEWray COPY CHIEF David EDITOR Tucker Ewing SENIOR CONTRIBUTING EDITORS Fran Sivert ASSOCIATE EDITORS Emily Fleckner, Hawthorne, Harvey D. Shapiro, Stephen Taub Hagen Pam Abramowitz, Danielle Beurteaux, Phil Davis, Katie Gilbert, SENIOR CONTRIBUTING EDITORS Fran Hawthorne, Udayan Gupta, Scott Martin, Neil O’Hara, Nick Rockel, JayeD. Shapiro, Charles Smith Hal Lux, Harvey Scholl, Irwin Speizer COPY DEPARTMENTTaub, Joan Warner (Tokyo), Stephen Deputy Copy Chief: Bill Christophersen; CONTRIBUTING EDITORS Colin Barraclough, Copy Editors: Ingrid Accardi, Ruth Hamel Lucy Conger (Mexico City), Jonathan Kandell, ASSISTANT TO THE EDITOR Elizabeth Simroe Lois Madison Reamy, Kazuhiko Shimizu ART DEPARTMENT Deputy Art Director: Diana Panﬁl; (Beijing), Leah Nathans Spiro Associate Art Director: Anthony Scerri; Senior Designer: Lee H.Wilson; COPY DEPARTMENT Deputy Copy Chief: Jeff CranAssociate: Sabrina Henley; Photo Editor: Daniella Nilva; mer Associate Photo Editor: Alden Gewirtz; CONTRIBUTING WRITERS COPY CHIEF David Wray Color Imaging Manager: John Miliczenko ASSISTANT TO THE EDITOR Elizabeth Simroe CHAIRMAN & CEO Gary Mueller ART DEPARTMENT Deputy Art Director: Patrizia Bove; GROUP PUBLISHER Christine Cavolina Associate Art Director: Stephanie Lora; Photo Editor: PUBLISHER Joy DeSanto Anastasia Pleasant; Color Imaging Manager: PUBLISHER, INTERNATIONAL Spencer Wicks John Miliczenko PUBLISHER, ASIA Wendy Gallagher ONLINE SALES DIRECTOR Chris DeAngelis PRESIDENT & CEO Christopher R. Brown EXECUTIVE DIRECTOR OF MARKETING PUBLISHER Christine Cavolina Gill PRODUCTION DIRECTOR Brian DIRECTOR OF FULFILLMENT Robert Tonchuk PUBLISHER, INTERNATIONAL Lisa Traeger CHIEF OPERATING OFFICER David E. Antin PRODUCTION DIRECTOR Brian Gill Institutional Investor’s AlphaTM and Alpha,TM 225 Park Avenue South, New York, NY 10003; (212) 224-3300; Fax: (212) 224-3171. MANAGING DIRECTOR OF RESEARCH PRODUCTS © 2008 Institutional Investor, Inc. No statement in this magazine is Denise Murrell to be construed as a recommendation to buy or sell securities. Neither this publicationOF FINANCE it may be reproduced or transmitted DIRECTOR nor any part of AND OPERATIONS in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval David E. Antin system, without the prior written permission of Institutional Investor magazine. For reprints, contact TM Dewey Palmieri (212) 224-3675; Institutional Investor’s Alpha and Alpha,TM 225 Park AvFax: (212) 224-3563; e-mail: dpalmieri@iinvestor.com. Subenue South, New York, NY 10003; (212) (44-20) 7779 8999 scription hotline (800) 437-9997; Overseas 224-3300; Fax: (212) 224-3171. Louis Cassetta THE LIST OF TRADERS who have ﬂed the canyons of Wall Street to start their own hedge funds is a long one. For most, the appeal is obvious: They get to be their own boss, invest with abandon and, if successful, make boatloads of money — all without having to deal with the politics and pressures of working for a bank or brokerage. Consider Daniel Och, who left a good job as co-head of U.S. equity trading at Goldman, Sachs & Co. nearly 15 years ago to found Och-Ziff Capital Management Group with $100 million from the Ziff family, which had made its fortune in publishing. As Senior Editor Loch Adamson reports in this month’s cover story, “Welcome to OZ” (page 24), Och’s plan from the very beginning was to build a large alternative asset management ﬁrm, taking the best of what he had learned at Goldman — especially when it came to recruiting and compensation — to create a culture of cooperation that would enable Och-Ziff to generate good risk-adjusted returns as it grew. Och has done just that. With $33.4 billion in assets under management, Och-Ziff is now the ﬁ fth-biggest hedge fund ﬁ rm in the world. And its ﬂagship OZ Master Fund has delivered a 16.5 percent annualized return since its 1994 inception, beating the Standard & Poor’s 500 stock index by more than 5 percentage points a year with less than half the volatility. But, as Adamson writes, Och has an even bolder vision for his 425-person ﬁ rm: He wants to turn it into a global deal-making giant that can compete with Wall Street. That’s why he and his partners took their ﬁrm public last fall even as the U.S. equity markets were collapsing, raising $1.6 billion in capital that they plowed back into their funds. Although the funds’ performance has largely held up, Och-Ziff’s share price has fallen by more than one third since the November IPO. Size, as always, is at the center of the Hedge Fund 100, our annual ranking of the world’s biggest single-manager hedge fund ﬁrms. This year the numbers are more incredible than ever. The 100 biggest ﬁrms managed a combined $1.35 trillion in assets as of December 31, 2007 — up 35 percent from a year ago. In 2007, hedge fund managers beneﬁted from a large infusion of institutional capital, reports Senior Editor Karl Cates in “Feeding the Beast(s)” (page 49), as investors sought refuge from the turbulent markets. JPMorgan Asset Management, with $44.7 billion in single-manager hedge funds, leads the Hedge Fund 100 for the second year in a row. Like Dan Och and his partners at Och-Ziff, JPMorgan and its Highbridge Capital Management unit are known for their conservative, lowrisk approach to hedge fund investing. In times like these, that’s exactly what many investors are looking for. MICHAEL PELTZ EXECUTIVE EDITOR mpeltz@iimagazine.com MAY 2008 • INSTITUTIONAL INVESTOR’S ALPHA • 3 FEBRUARY2008 • INSTITUTIONAL INVESTOR’S ALPHA • 00

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

Institutional Investor's Alpha Magazine - May 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Send in the Clones The Good Guys: Outside the Box Cover Story: Welcome to Oz Interview: The Tipping Point Regulation: When Sentinels Go Astray Strategies: Taking Credit Research Center: The Hedge Fund 100 Book Excerpt: Shoot the Messenger Alpha Bytes: VaR Enough? Unhedged: Commentary: Not Your Father's Activist

Institutional Investor's Alpha Magazine - May 2008

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