Bone Marrow Donations: More Blacks Need Apply
Africana.com
By Pamela Appea
Walter Chism says he used to think leukemia wasn’t a disease blacks had to think too much about. But after Chism’s five-year-old granddaughter, Bria, was diagnosed with chronic myeloid leukemia in the fall of 1998, the reality of leukemia’s relevance to the African American community hit home.
The Chisms, who live in the Kansas City, Missouri area, learned that Bria’s one shot at survival hinged on a bone marrow transplant. As none of her family members were able to provide a good match for Bria, their hopes turned to donor matches. Three months later, Bria and her family learned of a woman in England whose marrow was a good match, though not a perfect one, for Bria’s.
While the bone marrow transplantation procedure went well, Bria succumbed to the disease a few months after her sixth birthday. She died in my arms,” says Walter Chism, who, along with his wife LaGail, had raised Bria since birth.
Bria’s death changed a lot of things for the Chisms. They started going to church more and became more involved in their community. And in December 1999, the Chisms launched the Bria T. Chism Foundation, a Raytown, Missouri-based organization devoted to raising awareness about bone marrow donation in the African American community. By going to churches, universities, community centers and other groups, the non-profit foundation, which also provides financial and economic support to people with leukemia and other blood diseases, has signed up almost 200 African Americans in Missouri.
Bone marrow, the spongy tissue found inside the bone, is typically extracted from a donor’s hip or pelvic area. Beginning in the late 1960s, doctors have used bone marrow transplants to treat leukemia, sickle cell anemia, lymphoma and other blood-related diseases. A related procedure, stem cell transplantation, uses immature blood cells in battling some of the same illnesses.
The best donors for such procedures are usually found within one’s own biological family. But, according to experts, more than 70 percent of patients cannot find a match within their families and must seek a match from an unrelated donor.
Because some characteristics of tissue type vary among ethnic groups, it is most likely a person will find a match with someone of their own race according to the National Marrow Donor Program (NMDP), a Minneapolis-based organization that matches patients with anonymous donors nationwide through a vast volunteer registry.
But because fewer African Americans are listed on the registry, black patients in need of bone marrow transplants have even lower odds of finding a potential match--and because of this, mortality rates for blacks with leukemia are higher than for whites. Despite some Recent high-profile cases, such as the publicity surrounding the death of baseball start Rod Carew’s daughter, or Charles Dutton’s televised plea for donors to help his niece, registered donors in the African American community lag behind other populations.
African-Americans Uniting for Life” is the NMDP’s campaign to recruit more minorities to join the national bone marrow registry. Since its inception in 1995, says Helen Ng, spokeswoman for the National Marrow Donor Program, the organization has seen the numbers of African Americans in the registry more than triple.
The numbers are still discouraging. Founded in 1987, the NMDP has seen 339,000 African Americans register as donors, compared to nearly 2.5 million whites. Because the change of finding a match increases exponentially with the size of the donor pool, that means that only 490 African Americans have received transplants based on NMDP matches, while some 9,5000 whites have in the same time period. Another initiative focusing on bone marrow donation, the Judie Davis Morrow Donor Program, is named for an African American woman who died awaiting a donor; it estimates that African Americans receive transplants only 3.3% of the time, as compared to a rate of 85% to 88% for whites.
Why are there fewer black donors? According to a survey conducted by Clive Callendar, director of the Transplant Center for Howard University and founder of the National Minority Organ Tissue Transplant Education Program (MOTTEP), the five main reasons African Americans are less likely to donate organs or tissues are: lack of information, religious beliefs, fear, mistrust of the medical community and doubts that donated organs are fairly distributed. MOTTEP and other groups have had significant success in the past decade increasing the number of blacks registered as organ donors, but the demand still far outweighs the supply.
Walter Chism says people are hesitant to donate marrow because there is still a lack of knowledge about the process and how it benefits others. He also noted that racist treatment by the medical establishment, in incidents such as the Tuskegee Syphilis Experiment as well as day-to-day inequities, still linger in the minds of African Americans.
“We have to get past those old stereotypes,” Chism says, adding that diversity among registry staff itself is important. “When somebody comes to you with a request and they look like you,” he say,” he says, “Perhaps people will be willing to donate.”
Isaac Fordjour, NMDP’s Northeast manager for outreach and recruitment, says the lack the lack of African American representation in the bone marrow registry pool is regrettable.
“It’s not that African Americans are not getting sick,” Fordjour says, noting that when he goes on NMDP bone marrow drives in white communities, “the lines can be out the door,” and he has sometimes had to turn people away when the supplies ran out. On the other hand, Fordjour says, he has experienced more than one less-than-successful church-based bone marrow drive targeted at the African American: “It was basically the minister and I looking at each other,” Fordjour bluntly recalls.
“People think donating is a very painful, intrusive procedure,” Fordjour says. “It couldn’t be further from the truth.” Fordjour saw a fraternity brother die of leukemia about six years ago because the University of Memphis junior could not find a match. He joined the organization as a volunteer during that time, but he quickly found his vocation has worked on the national level since 1997: it’s more than just a job for him.
Joining the registry takes only a few minutes, bone marrow donor advocates say, including filling out a name and address form and giving a blood sample. If and when a potential donor matches with a potential recipient, the donor, the donor is asked to undergo an outpatient procedure lasting about 45 to 90 minutes—potential donors are never forced to donate. Generally a bone marrow donor spends less than a full day at the hospital. Bone marrow, like blood, is naturally regenerated by the body.
“Leukemia is a life-threatening disease. You need to make a diagnosis quickly, you need to make treatment quickly,” said Chatchada Larames, M.D., medical director of the National Marrow Donor Program, Karanes, who worked at Wayne State’s medical school in their bone marrow division for 20 years, says receiving a bone marrow donation is crucial if a patient is going to survive.
Because African Americans are often multiracial, with Native Americans, white and other ethnic groups in their ancestral heritage, Karanes says finding a bone marrow match becomes every harder. The more African Americans, Latinos, Native Americans and white who join, she adds, the better the chances for a match for everyone.
Anyone can donate bone marrow, if they are in good health, and between the ages of 18 and 60, Karanes says. Even people with mild arthritis, mild asthma and diet-controlled diabetes are typically eligible to donate their bone marrow.
Gloria Shelton, a 39-year-old real estate appraiser, says she was called a year after she signed up for the bone marrow registry at a music festival in South Carolina. “It really doesn’t hurt,” says Shelton, who received general anesthesia during the procedure. “I was a little stuff for the first two days,” she says, but adds that she would do it again in a heartbeat.
Bob Tolden is glad she did. Tolden, a mining engineer from Tuscon, Arizona, found out that he had leukemia on March 4, 1998. A single father, Tolden was afraid he wouldn’t be around to take care of his daughter. He found a match within a few months: Gloria Shelton.
Donors and recipients are kept anonymous from each other for about a year. But in gratitude, Tolden wrote to his donor. The two began to write to each other, and eventually met. “She saved my life,” Tolden says simply. Like Bria Chism, Tolden developed graft-versus-host-disease, a post-operative risk to bone marrow transplants in which the donor’s T-cells recognize they are in a new body and actually attack the body, causing severe problems. But Tolden overcome active in bone marrow donation drives. He says he stays in regular email and telephone contact with Shleton, who is now godmother to his daughter.
The bottom line, all agree, is getting the word out: black leukemia deaths can be prevented by increased bone marrow donation. “The biggest problem was lack of knowledge.”
“I don’t care where you are,” adds Fordjour. “You can host a donor drive, or at least tell another person. You can do something about it today.”
Originally published March 21, 2001
Wednesday, March 21, 2001
Thursday, March 01, 2001
Salomon Smith Barney Prime Brokerage Profile, Alternative Investment News
Prime Brokerage Profile, Alternative Investment News
By Pamela Appea
Salomon Smith Barney, a member of Citigroup
Barry Weiss, managing director of equity finance
Sal Campo, managing director, equity finance division
Thomas Tesauro, managing director, co head of global equity finance
By Pamela Appea
Salomon Smith Barney’s prime brokerage division is launching an international prime brokerage effort. At the same time, it is looking to aggressively attract assets from institutional investors by introducing new services, for example, in the area of risk management, said Sal Campo, managing director of the equity finance division, under which falls prime brokerage.
Prime Brokerage Services/Structure
SSB’s prime brokerage division was started five years ago, and it now aims to become a full-service global firm, to take its place in line with older more-established prime brokerage units. SSB services medium to large-sized hedge funds, said Campo, noting the group’s largest hedge fund clients boasts about $4 billion to $5 billion in assets and its smallest hedge fund weighs in at $50 million.
SSB offers services including securities lending, operations, technology and customer service. It has gained additional support services through the Citigroup merger, including insurance, research and banking, which SSB hopes will strengthen relations with institutional investors, such as pension funds, said Campo. In addition, Citigroup has a capital introductions group, which is beneficial to SSB’s prime brokerage clients. A Citi staffer can introduce pension funds to the prime brokerage group’s clients, Campo explained.
Institutions seen gaining in Importance
As more institutional investors—pension funds, endowments and foundations—commit dollars to hedge funds and other alternative investments, SSB’s prime brokerage division is looking for ways to better accommodate institutional investors served by the division’s hedge fund clients, said Thomas Tesauro, managing director.
Pension funds, many of which have established relationships with Citi, are still somewhat skittish, however. To attract these investors to its hedge fund clients, SSB is currently planning on expanding or developing transparency and risk management services. The group is putting a formal risk management system in place, Campo said, noting pensions want in-depth reporting.
“What we’re seeing in the market place is that pension funds are looking for independent transparency,” Campo said.
Pension funds are starting to request information from independent parties such as prime brokerage, instead of going to the hedge funds for the data.
Growth Plans
SSB is widening its reach in addition to its services and has launched an international prime brokerage effort. The effort will be run out of its headquarters in London and is slated to pen within the year. Gary Link, who recently joined from J.P. Morgan Chase & Co., will serve as managing director and head of the office. He will oversee a staff of about 12 people, five of whom have already been hired.
SSB’s prime brokerage division is opening in London to capitalize on rising demand for hedge funds from European investors. “The piece we’re missing is the global prime brokerage component,” Tesauro said. “It’s just a matter of time.” Tesauro and Campo said they expect it will take time to develop the international prime brokerage division, noting that its major competitors have the short-term advantage of being a bit more established.
On the domestic front, SSB’s prime brokerage division is also expanding, and the division will soon name a managing director for a planned San Francisco office this month. At the same time, the group has hired John Bell for its San Francisco office, who hails from Donaldson, Lufkin & Jenrette. Bell joins as a director, responsible for marketing prime brokerage services to prospective clients, in addition to providing services to existing clients.
By Pamela Appea
Salomon Smith Barney, a member of Citigroup
Barry Weiss, managing director of equity finance
Sal Campo, managing director, equity finance division
Thomas Tesauro, managing director, co head of global equity finance
By Pamela Appea
Salomon Smith Barney’s prime brokerage division is launching an international prime brokerage effort. At the same time, it is looking to aggressively attract assets from institutional investors by introducing new services, for example, in the area of risk management, said Sal Campo, managing director of the equity finance division, under which falls prime brokerage.
Prime Brokerage Services/Structure
SSB’s prime brokerage division was started five years ago, and it now aims to become a full-service global firm, to take its place in line with older more-established prime brokerage units. SSB services medium to large-sized hedge funds, said Campo, noting the group’s largest hedge fund clients boasts about $4 billion to $5 billion in assets and its smallest hedge fund weighs in at $50 million.
SSB offers services including securities lending, operations, technology and customer service. It has gained additional support services through the Citigroup merger, including insurance, research and banking, which SSB hopes will strengthen relations with institutional investors, such as pension funds, said Campo. In addition, Citigroup has a capital introductions group, which is beneficial to SSB’s prime brokerage clients. A Citi staffer can introduce pension funds to the prime brokerage group’s clients, Campo explained.
Institutions seen gaining in Importance
As more institutional investors—pension funds, endowments and foundations—commit dollars to hedge funds and other alternative investments, SSB’s prime brokerage division is looking for ways to better accommodate institutional investors served by the division’s hedge fund clients, said Thomas Tesauro, managing director.
Pension funds, many of which have established relationships with Citi, are still somewhat skittish, however. To attract these investors to its hedge fund clients, SSB is currently planning on expanding or developing transparency and risk management services. The group is putting a formal risk management system in place, Campo said, noting pensions want in-depth reporting.
“What we’re seeing in the market place is that pension funds are looking for independent transparency,” Campo said.
Pension funds are starting to request information from independent parties such as prime brokerage, instead of going to the hedge funds for the data.
Growth Plans
SSB is widening its reach in addition to its services and has launched an international prime brokerage effort. The effort will be run out of its headquarters in London and is slated to pen within the year. Gary Link, who recently joined from J.P. Morgan Chase & Co., will serve as managing director and head of the office. He will oversee a staff of about 12 people, five of whom have already been hired.
SSB’s prime brokerage division is opening in London to capitalize on rising demand for hedge funds from European investors. “The piece we’re missing is the global prime brokerage component,” Tesauro said. “It’s just a matter of time.” Tesauro and Campo said they expect it will take time to develop the international prime brokerage division, noting that its major competitors have the short-term advantage of being a bit more established.
On the domestic front, SSB’s prime brokerage division is also expanding, and the division will soon name a managing director for a planned San Francisco office this month. At the same time, the group has hired John Bell for its San Francisco office, who hails from Donaldson, Lufkin & Jenrette. Bell joins as a director, responsible for marketing prime brokerage services to prospective clients, in addition to providing services to existing clients.
Gregoire Expands Analyst Team
Gregoire Expands Analyst Team
Alternative Investment News
By Pamela Appea
February 2001
John Levitt, a former hedge fund manager and convertible arbitrage specialist, has joined Gregoire Advisory Services, a hedge fund consulting firm, as an alternative investment analyst. Levitt was previously managing director of the Harvest Fund Group LLC, a convertible arbitrage hedge fund.
Prior to that, Levitt was v.p. in charge of convertible arbitrage for Spear, Leeds & Kellogg, now a division of Goldman Sachs. Based in Millburn, N.J., the firm provides hedge fund consulting services to banks and fund of funds managers as well as institutional investors.
Jim Gregoire, president of Gregoire Advisory, said essentially Gregoire allows institutional investors to create and manage their personalized fund of funds strategy.
The firm has almost $500 million of hedge fund portfolio under management or consultation.
Alternative Investment News
By Pamela Appea
February 2001
John Levitt, a former hedge fund manager and convertible arbitrage specialist, has joined Gregoire Advisory Services, a hedge fund consulting firm, as an alternative investment analyst. Levitt was previously managing director of the Harvest Fund Group LLC, a convertible arbitrage hedge fund.
Prior to that, Levitt was v.p. in charge of convertible arbitrage for Spear, Leeds & Kellogg, now a division of Goldman Sachs. Based in Millburn, N.J., the firm provides hedge fund consulting services to banks and fund of funds managers as well as institutional investors.
Jim Gregoire, president of Gregoire Advisory, said essentially Gregoire allows institutional investors to create and manage their personalized fund of funds strategy.
The firm has almost $500 million of hedge fund portfolio under management or consultation.
Emerging Markets Come Out on Top
Emerging Markets Come Out on Top
Alternative Investment News
Performance Roundup
By Pamela Appea
March 2001
Emerging markets came out on top in January, reversing last year’s slump, when they were one of the worst performers. Emerging market managers primarily benefited from the U.S. Federal Reserve board’s interest rate cute in early January, coupled with the issuance of Eurobonds by emerging countries. At the same time, the bound in the Nasdaq Stock Market helped to boost the sector’s performance, said managers and consultants.
The CSFB/Tremont Index reported emerging market manages returned 4.3% up from 2.3% in December. The Hennessee Hedge Fund Index showed emerging markets up 6.36% and Van Hedge Fund Advisors reported a 15.1% gain the month of January.
This is a considerable improvement from last year, when emerging markets ranked 20 out of 22 in Hennessee’s index.
The rate cut helped emerging markets by reducing interest rates, which stimulated bond markets in the domestic and Eurobond markets. Issuance of Eurobonds by Brazil, Mexico and Colombia and new capital flows into the sector, helped to boost performance.
James Edward, a head trader at Paris-based hedge fund Barep Asset Management, a subsidiary of Societe Generale Group, said, “There were definite new capital flows, and as our market is a very small market, it makes a significant difference.” He also noted the rebound in the Nasdaq, and the rebound of swap spreads also contributed to the emerging markets sector’s positive performance.
Alternative Investment News
Performance Roundup
By Pamela Appea
March 2001
Emerging markets came out on top in January, reversing last year’s slump, when they were one of the worst performers. Emerging market managers primarily benefited from the U.S. Federal Reserve board’s interest rate cute in early January, coupled with the issuance of Eurobonds by emerging countries. At the same time, the bound in the Nasdaq Stock Market helped to boost the sector’s performance, said managers and consultants.
The CSFB/Tremont Index reported emerging market manages returned 4.3% up from 2.3% in December. The Hennessee Hedge Fund Index showed emerging markets up 6.36% and Van Hedge Fund Advisors reported a 15.1% gain the month of January.
This is a considerable improvement from last year, when emerging markets ranked 20 out of 22 in Hennessee’s index.
The rate cut helped emerging markets by reducing interest rates, which stimulated bond markets in the domestic and Eurobond markets. Issuance of Eurobonds by Brazil, Mexico and Colombia and new capital flows into the sector, helped to boost performance.
James Edward, a head trader at Paris-based hedge fund Barep Asset Management, a subsidiary of Societe Generale Group, said, “There were definite new capital flows, and as our market is a very small market, it makes a significant difference.” He also noted the rebound in the Nasdaq, and the rebound of swap spreads also contributed to the emerging markets sector’s positive performance.
Emerging Markets Come Out on Top
Emerging Markets Come Out on Top
Alternative Investment News
Performance Roundup
By Pamela Appea
March 2001
Emerging markets came out on top in January, reversing last year’s slump, when they were one of the worst performers.
Emerging market managers primarily benefited from the U.S. Federal Reserve board’s interest rate cute in early January, coupled with the issuance of Eurobonds by emerging countries. At the same time, the bound in the Nasdaq Stock Market helped to boost the sector’s performance, said managers and consultants.
The CSFB/Tremont Index reported emerging market manages returned 4.3% up from 2.3% in December. The Hennessee Hedge Fund Index showed emerging markets up 6.36% and Van Hedge Fund Advisors reported a 15.1% gain the month of January.
This is a considerable improvement from last year, when emerging markets ranked 20 out of 22 in Hennessee’s index.
The rate cut helped emerging markets by reducing interest rates, which stimulated bond markets in the domestic and Eurobond markets.
Issuance of Eurobonds by Brazil, Mexico and Colombia and new capital flows into the sector, helped to boost performance.
James Edward, a head trader at Paris-based hedge fund Barep Asset Management, a subsidiary of Societe Generale Group, said, “There were definite new capital flows, and as our market is a very small market, it makes a significant difference.”
He also noted the rebound in the Nasdaq, and the rebound of swap spreads also contributed to the emerging markets sector’s positive performance.
Alternative Investment News
Performance Roundup
By Pamela Appea
March 2001
Emerging markets came out on top in January, reversing last year’s slump, when they were one of the worst performers.
Emerging market managers primarily benefited from the U.S. Federal Reserve board’s interest rate cute in early January, coupled with the issuance of Eurobonds by emerging countries. At the same time, the bound in the Nasdaq Stock Market helped to boost the sector’s performance, said managers and consultants.
The CSFB/Tremont Index reported emerging market manages returned 4.3% up from 2.3% in December. The Hennessee Hedge Fund Index showed emerging markets up 6.36% and Van Hedge Fund Advisors reported a 15.1% gain the month of January.
This is a considerable improvement from last year, when emerging markets ranked 20 out of 22 in Hennessee’s index.
The rate cut helped emerging markets by reducing interest rates, which stimulated bond markets in the domestic and Eurobond markets.
Issuance of Eurobonds by Brazil, Mexico and Colombia and new capital flows into the sector, helped to boost performance.
James Edward, a head trader at Paris-based hedge fund Barep Asset Management, a subsidiary of Societe Generale Group, said, “There were definite new capital flows, and as our market is a very small market, it makes a significant difference.”
He also noted the rebound in the Nasdaq, and the rebound of swap spreads also contributed to the emerging markets sector’s positive performance.
Do Mutual Fund Stars Make for Leading Hedge Fund Managers?
Do Mutual Fund Stars Make for Leading Hedge Fund Managers?
Alternative Investment News
March 2001
By Pamela Appea
Star mutual fund managers, and even their lesser-known colleagues, have been leaving the industry in droves to become hedge fund managers. That’s for certain.
But what remains unclear is. Whether the skills that led to top mutual fund performance translate to hedge funds.
The ability of mutual managers to pick winning stocks, while certainly key, may not be enough when it comes to generating strong hedge fund performance, said hedge fund consultants and hedge fund managers.
Differences in asset management styles and organizational support and structure, particularly between the large mutual fund complexes and small boutique hedge funds, can raise hurdles to mutual fund managers in the hedge fund arena, they noted.
The managers are moving from a position where their main focus is stock picking to one where they are running a money management business, where they too have to draw on their asset management strategies but also deal with other aspects of the business.
The main challenges for those crossing over to hedge funds including shorting securities, asset gathering, setting up company infrastructure and development and dealing with investors who may be more focused on shorter-term performance than mutual fund investors, pointed out hedge fund managers and industry consultants.
Former mutual fund managers may face obstacles when they switch over to hedge funds, but that is not to say they cannot be successful, newly minted hedge fund managers are quick to add. Managers can bring skills including knowledge of the market and also a strong understanding of portfolio management, to hedge funds.
Consultants point to Jeff Vinik, former manager of Fidelity’s Investment’s Magellan Fund, as an example of a success story.
Vinik, who recently returned money to investors and handed over the reigns over the reigns as head of his hedge fund, opened Vinik Asset Management with $800 million in 1996. Vinik succeeded in growing assets to $4.2 billion--positing a return of 645.8% since inception.
Shorts Seen as Challenge
One of the major differences in investment styles between mutual funds and hedge funs is the ability to short stocks. Mutual funds can take short positions, but most do not in any significant way. Playing the downside of the market is different, while related, to playing the upside. For one, the time window in which a stock needs to depreciate for a short position to be profitable can be smaller than the one needed for a long position to appreciate.
“The hardest thing to do in all of finance is to short stocks,” said Hunt Taylor, director of investments of Stern Investment Holdings, the investment arm of the Hartz Group, based in Secaucus, N.J. Additionally, there is no cap on how much a security can rise. But a security can only fall 100%, Taylor added, and that can be a significant adjustment for cross-over managers.
Former Loomis Sayles mutual fund manager Jerry Castellini, founder of Chicago-based CastleArk Management, agrees. He said switching from long-only to the lon/short model was difficult. But at the same time, Castellini said, hedge fund managers can often focus on honing a narrow strategy more than mutual fund managers can. This gives the hedge fund managers the ability to spend more time evaluating securities so they can play the downside.
Both of CastleArk’s hedge funds have had above-average returns: Its diversified hedge fund had a 65% annual return-after expenses in 2000, and its energy hedge fund was up 66% after expenses last year.
Building Infrastructure Presents Hurdle
Sometimes the highest hurdle to surmount is not adjusting to differences in asset strategy but dealing with what can often be a far less support, especially in areas such as capital raising. It can be a disconcerting adjustment for a mutual fund managers coming from a big-name complex to a small hedge fund shop, said Richard Lake, a consultant for Greenwich, Connecticut-based Lake Partners.
Making up for the lack of resources can be an enormous challenge, he explained. The amount of seed capital with which a hedge fund launches can be a strong factor in which makes or breaks a new shop, said CastleArk’s Castellini. Managers who spend large tracks of time raising money may do so at the expense of focusing on the fund strategy, Castellini noted, adding CastleArk raised $700 million in its first year, comprised of both hedge fund and mutual fund assets.
Star mutual fund managers may be more likely to attract former clients and new money based on name recognition while others with smaller profiles might have a more difficult time, he said.
Building firm infrastructure, which includes such things as hiring skilled people or getting used to new accounting system, also presents challenges to new hedge fund market entrants.
Michael Lipper, a pioneer in the mutual fund arena, and president of Lipper Advisory Services based in Summit, New Jersey, said without infrastructure, a cross-over mutual fund manager can have a difficult time, especially if they hail from a prestigious mutual fund company.
Lipper, co-founder of a new hedge fund that currently has $17 million in assets under management, is working on growing the fund.
Hedge fund investors themselves also present challenges that mutual fund investors do not in that the hedge fund investors are often more focused on shorter-term performance.
As former Monument Internet Fund manager Alex Cheung noted, mutual fund investors often judge performance by short-term profits and returns.
Mutual fund investors might look at performance once every three months while institutions want more updates, added Chung, now managing director of King of Prussia-based hedge fund shop Long Bow Capital Management, a technology long/short fund shop.
Cheung declined to divulge how much Long Bow has in assets under management or performance information. He did say the new firm hopes to show profit in six to 12 months.
The jury is still out on how these cross-over managers will do. Over the next year, market players will be watching to see who wins and who loses.
Alternative Investment News
March 2001
By Pamela Appea
Star mutual fund managers, and even their lesser-known colleagues, have been leaving the industry in droves to become hedge fund managers. That’s for certain.
But what remains unclear is. Whether the skills that led to top mutual fund performance translate to hedge funds.
The ability of mutual managers to pick winning stocks, while certainly key, may not be enough when it comes to generating strong hedge fund performance, said hedge fund consultants and hedge fund managers.
Differences in asset management styles and organizational support and structure, particularly between the large mutual fund complexes and small boutique hedge funds, can raise hurdles to mutual fund managers in the hedge fund arena, they noted.
The managers are moving from a position where their main focus is stock picking to one where they are running a money management business, where they too have to draw on their asset management strategies but also deal with other aspects of the business.
The main challenges for those crossing over to hedge funds including shorting securities, asset gathering, setting up company infrastructure and development and dealing with investors who may be more focused on shorter-term performance than mutual fund investors, pointed out hedge fund managers and industry consultants.
Former mutual fund managers may face obstacles when they switch over to hedge funds, but that is not to say they cannot be successful, newly minted hedge fund managers are quick to add. Managers can bring skills including knowledge of the market and also a strong understanding of portfolio management, to hedge funds.
Consultants point to Jeff Vinik, former manager of Fidelity’s Investment’s Magellan Fund, as an example of a success story.
Vinik, who recently returned money to investors and handed over the reigns over the reigns as head of his hedge fund, opened Vinik Asset Management with $800 million in 1996. Vinik succeeded in growing assets to $4.2 billion--positing a return of 645.8% since inception.
Shorts Seen as Challenge
One of the major differences in investment styles between mutual funds and hedge funs is the ability to short stocks. Mutual funds can take short positions, but most do not in any significant way. Playing the downside of the market is different, while related, to playing the upside. For one, the time window in which a stock needs to depreciate for a short position to be profitable can be smaller than the one needed for a long position to appreciate.
“The hardest thing to do in all of finance is to short stocks,” said Hunt Taylor, director of investments of Stern Investment Holdings, the investment arm of the Hartz Group, based in Secaucus, N.J. Additionally, there is no cap on how much a security can rise. But a security can only fall 100%, Taylor added, and that can be a significant adjustment for cross-over managers.
Former Loomis Sayles mutual fund manager Jerry Castellini, founder of Chicago-based CastleArk Management, agrees. He said switching from long-only to the lon/short model was difficult. But at the same time, Castellini said, hedge fund managers can often focus on honing a narrow strategy more than mutual fund managers can. This gives the hedge fund managers the ability to spend more time evaluating securities so they can play the downside.
Both of CastleArk’s hedge funds have had above-average returns: Its diversified hedge fund had a 65% annual return-after expenses in 2000, and its energy hedge fund was up 66% after expenses last year.
Building Infrastructure Presents Hurdle
Sometimes the highest hurdle to surmount is not adjusting to differences in asset strategy but dealing with what can often be a far less support, especially in areas such as capital raising. It can be a disconcerting adjustment for a mutual fund managers coming from a big-name complex to a small hedge fund shop, said Richard Lake, a consultant for Greenwich, Connecticut-based Lake Partners.
Making up for the lack of resources can be an enormous challenge, he explained. The amount of seed capital with which a hedge fund launches can be a strong factor in which makes or breaks a new shop, said CastleArk’s Castellini. Managers who spend large tracks of time raising money may do so at the expense of focusing on the fund strategy, Castellini noted, adding CastleArk raised $700 million in its first year, comprised of both hedge fund and mutual fund assets.
Star mutual fund managers may be more likely to attract former clients and new money based on name recognition while others with smaller profiles might have a more difficult time, he said.
Building firm infrastructure, which includes such things as hiring skilled people or getting used to new accounting system, also presents challenges to new hedge fund market entrants.
Michael Lipper, a pioneer in the mutual fund arena, and president of Lipper Advisory Services based in Summit, New Jersey, said without infrastructure, a cross-over mutual fund manager can have a difficult time, especially if they hail from a prestigious mutual fund company.
Lipper, co-founder of a new hedge fund that currently has $17 million in assets under management, is working on growing the fund.
Hedge fund investors themselves also present challenges that mutual fund investors do not in that the hedge fund investors are often more focused on shorter-term performance.
As former Monument Internet Fund manager Alex Cheung noted, mutual fund investors often judge performance by short-term profits and returns.
Mutual fund investors might look at performance once every three months while institutions want more updates, added Chung, now managing director of King of Prussia-based hedge fund shop Long Bow Capital Management, a technology long/short fund shop.
Cheung declined to divulge how much Long Bow has in assets under management or performance information. He did say the new firm hopes to show profit in six to 12 months.
The jury is still out on how these cross-over managers will do. Over the next year, market players will be watching to see who wins and who loses.
Asset Alliance Set to Grow London, New York Office
Asset Alliance Set to Grow London, New York Office
Alternative Investment News
March 2001
By Pamela Appea
Asset Alliance, a hedge fund firm with $2.4 billion in assets under management, is hiring three people for its New York headquarters, and three people for its London office.
Bruce Lipnick, president and ceo of Asset, said all of the six slots are newly-created positions. The company wants to hire new people now, Lipnick said, because of the high demand from institutional investor clients, in both the U.S. and abroad.
Lipnick noted Asset is growing its London office to service potential institutional investors in England, France and Italy, among other countries.
Lipnick also noted the London office is prepared to see Italian institutional investors in the next six to nine months, due to recent alternatives legislation in the country.
Asset Alliance’s New York openings include a marketing and structured products executive, a risk management executive and a consultant for hedge funds catering to both institutional and high-net-worth clients.
In London, Lipnick said Asset Alliance is looking for a quantitative analyst for its funds-for-funds operations, along with two support staff members.
Lipnick said the company does not have specific timetable for the staff expansion, but said if the firm funds the right people, the hiring could completed by the end of the year.
Alternative Investment News
March 2001
By Pamela Appea
Asset Alliance, a hedge fund firm with $2.4 billion in assets under management, is hiring three people for its New York headquarters, and three people for its London office.
Bruce Lipnick, president and ceo of Asset, said all of the six slots are newly-created positions. The company wants to hire new people now, Lipnick said, because of the high demand from institutional investor clients, in both the U.S. and abroad.
Lipnick noted Asset is growing its London office to service potential institutional investors in England, France and Italy, among other countries.
Lipnick also noted the London office is prepared to see Italian institutional investors in the next six to nine months, due to recent alternatives legislation in the country.
Asset Alliance’s New York openings include a marketing and structured products executive, a risk management executive and a consultant for hedge funds catering to both institutional and high-net-worth clients.
In London, Lipnick said Asset Alliance is looking for a quantitative analyst for its funds-for-funds operations, along with two support staff members.
Lipnick said the company does not have specific timetable for the staff expansion, but said if the firm funds the right people, the hiring could completed by the end of the year.
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