Alpha - September 2007 - (Page 55)

fund that purchases secondaries, or limited partnership interests in venture capital funds and private equity from other LPs; a distressed managers fund; and an emerging managers fund. Although Goldman Sachs does not release performance stats from the private equity group, Cooper says annual returns during his tenure were comparable with those generated by other top-tier funds, which typically averaged 600 to 800 basis points above the Standard &Poor’s 500 index. For its next product, Lincoln Vale is working with several prominent Greek shipping families on an unconventional private equity fund that will invest alongside the families and participate in dry bulk and container shipping — rapidly growing markets that are inaccessible to most investors. The firm will soon launch a health care hedge fund — hardly a novelty in today’s market. But although an estimated 100 hedge funds invest in health care and the life sciences, only a handful focus FOR THE EIGHT YEARS THAT HE worked at Gold- exclusively on biotechnology, the target sector for the man, Cooper piloted his own plane each week to New new Lincoln Vale offering. Many investors avoid biotech York from Massachusetts, where he lived with his wife because underlying scientific data is difficult to access, and ﬁve children. It was only when his three-year-old son analyze and interpret. Cooper thinks the key to the asked if Cooper would ever live at home all the time that fund’s success will be its manager: Morana Jovan, a forhe decided to leave Goldman and try a new venture. mer senior partner with MPM Capital, one of the “Goldman Sachs was a terrific experiworld’s largest health care private eqence, and my group had grown to inuity funds, who more recently has clude talented and experienced been running a long-short health care executives fully set to carry on what we portfolio. had built together,” says Cooper. “It With a roster of 24 analysts, manwas time to get back out on the fronagers and professionals, Lincoln Vale is tier and build another unique ﬁrm.” developing additional products, includCooper founded Nantucket Parting a hedge fund in the public technolners in 2005 with Priestley, Knox and ogy space, a real estate hedge fund and Opatrny, but the group closed the several funds of funds in which Cooper firm the next year, owing to lack of insays he will refine the approach that vestor interest. Cooper and Priestley served as the foundation for the private immediately set out to develop a betequity franchise at Goldman Sachs. ter model. The result was Lincoln After his less-than-successful expeVale, which is housed in a modern rience with Nantucket Partners, glass office building just down Old Cooper is more determined than ever Lincoln Vale co-founder Bedford Road from Cooper’s châteauto require investors to get deeply inKatherine Priestley believes style house in Lincoln. The firm, volved in his funds’ investment the best investment which also has an office in Germany, processes — a practice he initiated at opportunities most often will has raised more than $100 million Goldman. AFA’s Jörneskog says that be found in niche markets. from Goldman partners, family ofCooper asked him to sit in on the prifices and such institutions as Goldvate equity group’s investment comman Sachs and Germany’s Allianz Group. Priestley, 41, mittee meetings and even participate in Goldman’s who lives in Maida Vale in London, says that despite review of potential fund investments before committing their experience with Nantucket Partners, she and capital to the fund of funds. Cooper insists on this Cooper will not give up their commitment to employ hands-on approach for the simple reason that, in his private equity, hedge funds and hybrids as needed. view, most investors do not understand the world of al“While this can be a deathtrap in the world of institu- ternatives and often would be better off in equity index tional investors, who still cling to their boxes, neither Phil funds — and, in some cases, bonds. Because he believes nor I could ever successfully be defined by boxed crite- that opportunities for consistent outperformance today ria,” says Priestley, “and neither will the ﬁrm.” are found only in markets in which managers can Lincoln Vale’s ﬁrst fund, Lincoln Vale European Partners achieve information or talent advantages, it is essential, Master Fund, is a hedge fund focused on small-cap and mid- he thinks, that investors understand the benefits — and cap European equities, a market that is becoming more pop- risks — of the niches and strategies he and Priestley are ular with investors but that is far from saturated and remains pursuing at Lincoln Vale. relatively opaque, owing to limited analyst coverage. Cooper “Phil and I are well aware from our Nantucket Partners describes the fund as “constructively activist,” meaning that experience that it does not pay to be too far ahead of current as it acquires ownership stakes in target companies, it works thinking regardless of how good an idea is,” Priestley says. to gain the respect and partnership of management teams. “In the end, investors across the world are conservative, and This constructive approach will distinguish the fund from we are very mindful of where the boundary is and how far it the many decidedly “destructive” activist hedge funds cur- can be pushed. But if you want to ﬁnd us, the boundary is rently operating in Europe, he adds. the best place to start looking.” SEPTEMBER 2007 • INSTITUTIONAL INVESTOR’S ALPHA • 55

Table of Contents Feed for the Digital Edition of Alpha - September 2007

Contents Letter from the Editor Longs & Shorts Pension Corner: Keeping the Faith The Good Guys: Going Public Interview: Barry Bausano - A Delicate Balance Cover Story: Cruel, Cruel Summer Profile: Phil Cooper - Alternative Flight Plan Strategies: Marshall Wace - TOPS in Its Field Profile: Fortis Investments - Banking on Alternatives Research Center: Top Equity Trading Firms Alpha Bytes: Desktop Duel Unhedged: Commentary - The Taxman Cometh

Alpha - September 2007

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