Institutional Investor's Alpha Magazine - October 2007 - (Page 48)

Alpha Awards: Top Service Providers Rothstein Kass and BDO Seidman, significantly outperform their Big Four competitors in almost every service category. Arguably, these smaller firms, which are used to catering to non–Fortune 500 companies, are better suited to dealing with the demands of hedge fund clients — which can be very frequent — especially in the start-up phase. Still, the Big Four remain solidly entrenched in the ranking. Deloitte Touche Tohmatsu, which has upwards of 135,000 professionals working in 140 countries , repeats at No. 3 overall in accounting. The ﬁrm scores especially high marks for client service and knowledge of regulatory and compliance issues among hedge funds with $1 billion or more under management. Not surprisingly, it ranks No. 1 among the fund managers in Alpha’s Hedge Fund 100 ranking of the world’s biggest single-manager hedge fund ﬁrms (see page 54). PricewaterhouseCoopers, the world’s biggest accounting ﬁrm, employing more than 140,000 people, improves its standing among hedge funds in this year’s ranking, moving up to ﬁfth place from No. 9. The ﬁrm scores well on Regulatory & Compliance issues, finishing third in that category overall. As the U.S. Congress looks to change how managers account for carried interest and whether limited partnerships that go public should be subject to corporate income tax rates higher than the 15 percent capital gains rate they currently pay, demands on accountants will increase. “The Street is watching carefully to see where Congress is going to go with the tax issue,” says Peter Testaverde, a partner in the financial services division of New York– based Goldstein Golub Kessler. He adds that, in general, Wall Street was not happy with the talk coming from Capitol Hill early this year about raising the taxes hedge funds pay but is hopeful that a more reasonable course can be found. GGK, which is expanding its business through its merger with Bloomington, Minnesota–based McGladrey & Pullen, ranks No. 4 overall, up a notch from its ﬁfthplace finish a year ago. Testaverde says that scale will help his ﬁrm continue to grow its funds business. Ernst & Young is also gaining ground among hedge fund managers, ranking sixth overall in this year’s Alpha Awards, up from No. 8. In a move underlining the increasing demand for — and growing shortage of — experienced accountants, industry veteran Joel Press, who founded Ernst & Young’s hedge fund practice, has come out of retirement. In January he joined Morgan Stanley as a managing director to work with prime brokerage clients on accounting issues. 48 • INSTITUTIONAL INVESTOR’S ALPHA • OCTOBER 2007 ADMINISTRATION W hen Amaranth Advisors began winding down its operations after losing more than 50 percent of its value to a bad bet on the direction of natural-gas futures last September, the demise of the Greenwich, Connecticut–based hedge fund ﬁrm left its employees suddenly looking for work and many of Amaranth’s competitors eager to snap them up. Among the ﬁrm’s most coveted talent were its back-ofﬁce and administrative personnel. As hedge funds have grown into large multistrategy organizations and their operations have become increasingly complex, so too have their administrative functions, particularly in regard to establishing net asset value. As a result, the search for talent has become very competitive. Smaller administrators now find themselves competing not only against big hedge fund firms that are handling their own administration — such as Chicago-based Citadel Investment Group — but also against the big

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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