Institutional Investor's Alpha Magazine - October 2008 - (Page 75)

(since Souede’s arrival in 1985, the ﬁ rm’s compounded growth rate is 24 percent). But hedge fund investors have short memories, and few will tolerate mediocre performance for long — pedigree notwithstanding. P ermal was born in 1973 as the wealth management arm of Worms & Cie, a holding company controlled by the magniﬁcently wealthy Worms family of Paris. When the closely linked Banque Worms was nationalized by president François Mitterrand’s government in the 1980s, the group was severely weakened; in 1997 it merged with Iﬁl, an industrial and investment vehicle controlled by Italy’s Agnelli family, of Fiat fame. Today the founders’ inﬂuence is gone: There are no family members at the ﬁrm, and Souede is by far its longest-serving employee. His path to the top began when he qualified as an accountant in New York State and worked for several companies before serving as chief ﬁnancial ofﬁcer through the 1980s at Merrimack, New Hampshire–based Chemical Fabrics Corp., now known as Chemfab. From there he joined Permal, which in the mid-1980s invested in an eclectic array of strategies that weren’t very well arranged. “Funds of hedge funds were a real cottage industry then,” Souede recalls. “It was all a little haphazard.” With James Hodge, the ﬁrm’s chief investment ofﬁcer and a former director of cost accounting for the New York Stock Exchange, Souede developed systems and controls to open the funds to third-party investors and to build up the asset base. By 1989, Permal had invested with 20 managers — including future Alpha Hedge Fund Hall of Fame members Julian Robertson Jr., George Soros and Michael Steinhardt. The wheels Souede put into motion then have carried Permal far: Today the ﬁ rm has ofﬁces in the Bahamas, Boston, Dubai, Hong Kong, London, New York, Paris, Singapore and Tokyo. It has 21 funds and invests with 215 managers. Permal promotes a three-pronged approach to running customers’ money: manager selection; portfolio construction and asset management; and risk management. The ﬁrm has a long record of ﬁnding, researching and investing in talented managers, usually early in their careers, and then riding their coattails for years on end. Lone Pine’s Mandel is a prime example. Several members of the Permal investment team knew him as a young Goldman, Sachs & Co. consumer retail analyst and followed his fortunes as an analyst in Robertson’s stable of funds at Tiger Management Corp. When Mandel set out on his own in 1997, Permal was among his ﬁ rst investors. Mandel’s deep understanding of stocks and his ability to properly time his short-selling led to annualized compound growth of 36 percent in Lone Pine’s ﬁrst 11 years. Permal was also an early investor in TT International, run by Tacchi, a former investment director with Fidelity International in London. TT’s European long-short equity fund distinguished itself by posting 20 percent average returns in 2001 and 2002, when the markets were falling. “He kept up this performance even as the market Indian Harbor, LLC Is Pleased to Announce the Opening of Our New Building One River Road Cos Cob, Connecticut Telephone 01.203.862.0400 Placement Agents for Top-Tier Managers

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

Institutional Investor's Alpha Magazine - October 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Process of Evolution The Good Guys: Israel's Champion Interview: Fast Lessons for Hard Times Cover Story: Industry Under Siege The New Hedge Fund Economics Good-Bye, Easy Money Caging the Shorts Strategies: Bottom Fishing Profile: Cult of Personalities Research Center: Alpha Awards: Eye of the Storm Alpha Bytes: Funneling the Chatter Unhedged: Commentary: Attention, Hedge Fund Shoppers

Institutional Investor's Alpha Magazine - October 2008

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