Institutional Investor's Alpha Magazine - October 2007 - (Page 10)

he says. “We believe we’ll begin to see more of these periodic deleveraging sales.” To ensure that its portfolio has the long-term capital necessary to execute its investment strategy and to wait out the slow unwinding process, Brownstein has attached an 18month soft lockup period to the SPM Credit Fund. Though the asset-backed paper market registered historic declines throughout August, there has been a notice- able improvement in the sector following last month’s 50basis-point rate cut by the Federal Reserve. Brownstein, however, believes short-term market improvements will have no bearing on the defaults that are inevitable. “There are going to be large numbers of problems and probably defaults,” he says. “And they’re going to take place over a signiﬁcantly longer period of time than people might expect.” — Dave Simons Planting the Seeds S SkyBridge Capital’s Scott Prince: Leveraging his hedge fund knowledge to help new managers get started. cott Prince knows a thing or two about starting a hedge fund. In 2004 he helped Eric Mindich, a former Goldman, Sachs & Co. colleague, with the launch of Eton Park Capital Management — one of the biggest hedge fund start-ups ever. Now, as co–managing partner of New York–based SkyBridge Capital, he is helping build a ﬁrm centered on seeding start-up hedge funds. Though Mindich’s reputation as a wunderkind at Goldman helped raise $3.5 billion for his ﬁrm’s launch, fund managers starting out today are finding it increasingly difficult to raise seed funding. Even those with similar pedigrees now count a $500 million launch as a victory. Starting a hedge fund has also become much more expensive, making initial funding all the more critical. To help ﬁll this need and to get in on the ground ﬂoor of promising new hedge funds, SkyBridge is providing fundraising and operational support for start-up fund managers. In exchange the firm gets an equity stake and a limited partnership investment. SkyBridge was launched in early 2005 by Anthony Scaramucci, 44, a former vice president in Goldman’s private wealth management group who went on to cofound Oscar Capital Management, which he sold to New York–based Neuberger Berman in 2001. Scaramucci believes networking is key in hedge fund management — the very reason he recruited Prince. “Scott’s Rolodex in the hedge fund space is very extensive,” he says. Networking, in fact, brought Prince and Scaramucci together. As global head of derivatives trading for Eton Park, Prince came across a lot of talented young traders eager for their own firms. He began thinking about ways to help them. “If a start-up business was the right thing to execute on the Eton Park platform, I’d have been happy to do it there,” says Prince, 44. “But it wasn’t the right ﬁt.” In January he stepped down from his position at Eton Park, remaining on as an adviser to the firm. At that time he mentioned his idea about a hedge fund seeding firm to Robert Matza, president of New York–based GoldenTree Asset Management and a former president of Neuberger. Matza realized that Prince’s idea was similar to what Scaramucci was already doing at SkyBridge and put the two in touch. When Scaramucci and Prince met, they realized that pairing up would be a natural move and talked about what role Prince could play in SkyBridge. With a background in trading, he had expertise in risk management and operations. Scaramucci was more inﬂuenced by marketing. “We had the same vision for the business and complementary skill sets that made sense to bring together,” says Prince, who joined SkyBridge in June. Prince’s operations expertise proved beneficial for SkyBridge almost immediately. Shortly after joining the seeding ﬁrm, he raised more than $50 million from new investors for one of SkyBridge’s six portfolios of hedge funds — which include New York–based Brompton Cross Capital Advisors, a hedge fund firm Photo by Rayon Richards for Alpha 10 • INSTITUTIONAL INVESTOR’S ALPHA • OCTOBER 2007

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - October 2007

Institutional Investor's Alpha Magazine - October 2007 Contents Letter from the Editor Longs & Shorts Pension Corner: Applied Knowledge The Good Guys: Autism Advocate Interview: Nerves of Steel Cover Story: Ivy League Education Alpha Awards: Top Service Providers: Trying Times Strategies: Passage to India Profile: The Oracle of Irvine Alpha Bytes: Futurama Research Center: Funds of Funds 50 Unhedged: Commentary: Crisis? What Crisis?

Institutional Investor's Alpha Magazine - October 2007

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