Institutional Investor's Alpha Magazine - July/August 2008 - (Page 10)

Act 2: After the Fall L aunching a new hedge fund might not be all that easy for Geoff Grant. His former ﬁrm, the $3 billion London-based global macro Peloton Partners, collapsed in February after spectacular losses from a massive long bet on mortgages. What Grant is doing now may look like the height of hubris: starting a new ﬁ rm — Grant Capital Partners in Santa Barbara, California — and seeking to launch a new global macro fund, LiquidMacro, while the wreckage of Peloton still smolders. “Geoff Grant is a proven leader and producer in the global macro community, ranking alongside the most successful names in the business,” proclaimed an early version of the new ﬁrm’s pitch book. Grant, 48, was a star global macro trader as co-head Scoreboard Hedge fund returns by strategy, sorted by investment process, asset class and geographic focus, through May 31, 2008. May return Composite, equally weighted Composite, asset-weighted PROCESS GROUP Directional trading Systematic trading Discretionary trading Relative value Arbitrage Convertible arbitrage Fixed-income arbitrage Mortgage-backed arbitrage Merger arbitrage Statistical arbitrage Multiprocess Security selection Long bias No bias Variable bias Short bias Specialist credit Distressed securities Long-short credit Multiprocess group Multiprocess Event-driven ASSET CLASS INDEXES Equity Fixed income Diversiﬁed Currencies GEOGRAPHIC AREA Developed markets Europe North America Japan Developed markets, diversiﬁed Emerging markets Combined Asia-Paciﬁc Global markets *Annualized. 1.86 1.20 2.39 1.81 1.68 1.25 0.22 0.74 0.60 –1.26 –0.06 –2.11 4.45 –4.09 –7.04 –4.14 1.37 1.39 2.05 1.15 0.60 –1.25 –1.99 –1.23 2.43 –3.79 1.55 –4.73 9.61 5.10 –1.48 3.91 8.67 8.36 8.68 4.43 9.70 13.70 10.52 13.30 4.43 5.35 4.55 7.16 4.89 7.78 7.75 7.06 1.76 1.20 1.51 –0.42 –2.42 –1.50 3.60 1.40 0.96 0.69 0.09 0.61 1.17 –0.67 8.64 2.38 10.17 6.21 10.41 4.84 6.10 2.82 4.87 4.46 1.37 1.74 0.93 1.23 1.43 1.51 1.88 1.38 1.19 1.19 0.04 1.95 2.03 2.10 1.83 1.23 1.19 1.17 1.38 1.49 1.16 2.35 4.06 8.50 –0.78 –0.19 –0.29 –1.51 –1.32 2.73 0.33 0.98 –2.03 –2.93 –4.46 0.60 –1.47 2.73 –1.18 –1.26 –1.36 –1.06 –1.18 –0.68 0.07 0.15 0.20 0.76 0.54 –1.35 1.53 1.29 2.03 1.87 –1.17 0.98 0.92 1.09 1.53 –2.77 0.67 0.44 0.85 0.38 –0.12 1.75 10.12 14.55 5.38 1.55 2.54 –1.37 1.61 7.90 –1.88 0.14 4.23 0.95 –0.83 4.34 3.43 10.15 –0.70 0.93 –2.87 0.15 1.78 –3.80 9.88 10.47 9.07 6.35 6.80 7.06 5.26 7.39 6.18 4.69 8.52 10.90 11.80 9.22 11.28 1.24 8.30 11.47 5.30 9.17 9.66 8.19 5.43 7.54 4.67 2.34 2.59 3.43 3.66 1.93 3.88 2.88 2.74 6.91 8.45 3.89 6.30 7.57 3.40 3.99 3.34 4.71 4.44 5.80 1.60% 1.86 YTD return –0.72% 0.21 3-month return 0.64% 0.65 12-month return 2.71% 3.63 3-year return* 9.54% 10.02 3-year std. dev.* 4.96 4.65 of proprietary and foreign exchange trading at Goldman, Sachs & Co., a job he left at the end of 2004. While there, he ran a stand-alone book promoted as having posted 11 proﬁtable years, two down years and one that was ﬂat. But it’s tough to square being a “proven leader” with Peloton’s demise, which happened on Grant’s watch as chief investment ofﬁcer, even if his team, based in California, wasn’t responsible for the disastrous mortgage trades (done by Peloton traders in London). Eric Peters, a Grant Capital partner and former Peloton trader, says the new ﬁrm’s employees, as well as Grant himself, are well aware of the climb they face. “Any fund that starts has something to prove, and we now have a little more to prove than many other people,” he notes. Grant Capital isn’t out pitching to all and sundry; it is instead hoping to build a track record running money for the partners and perhaps one or two key investors. It will focus on liquid securities. The ﬁrm reunites the original Peloton West Coast macro team. In addition to Grant, the managing partner, and Peters, who was once a proprietary trader at Lehman and Credit Suisse, the partners include Peloton alumni Perry Parker, an ex-Goldman options trader and former foreign exchange proprietary trader at Deutsche Bank, and Stephen Duneier, a former portfolio manager at London Diversiﬁed Fund Management. Grant hopes to have his new fund up and trading by September. He can take heart in knowing that at least one former Peloton partner is doing well. Maxwell Trautman, who worked with Grant at Goldman, left Peloton in 2006 before the troubles began and today runs a $225 million global macro fund, Stoneworks Asset Management, in London. In November, $15 billion Bahrainbased Investcorp said it would take a $50 million stake — I.R.-S. in Stoneworks. Skeptic for Hire T Source: MSCI. he complexity and opacity of structured-investment products helped precipitate last summer’s run on liquidity. Reassessing how these esoteric investments are priced a year later is a bigger-than-ever priority for market professionals the world over. Enter Edeus, a Wolverhampton, U.K.–based mortgage lending specialist that says its newly launched Asset Quality Assessment Service will bring more transparency to the U.K. marketplace by allowing investors and lenders to more accurately gauge the quality of mortgage-backed asset pools. What makes Edeus’s offering unique is its scope. Whereas typi- 10 • INSTITUTIONAL INVESTOR’S ALPHA • JULY/AUGUST 2008

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

Institutional Investor's Alpha Magazine - July/August 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Mr. Big Goes Small The Good Guys: Adopt This School! Interview: Man's Great Hope Cover Story: The Gentleman Activist Strategies: The New Bankers Profile: Staying Alive Research Center: The Best of the East The Asian Sensations Alpha Bytes: Into the Light Unhedged: Commentary: Speculating on Washington

Institutional Investor's Alpha Magazine - July/August 2008

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