Wednesday, 27 July 2016
Last updated 6 hours ago
Feb 1 2007 | 1:40pm ET
One morning back in 1995, struggling composer/producer Dennis Ross’ phone rang at 3:43 a.m. On the other line was Boyz II Men.
The multi-platinum R&B group—one of the biggest in the music world—wanted to meet with him in Philadelphia the next morning to sign him up as their record producer. Twelve years later, this successful-producer-turned-portfolio-manager is seeking absolute returns in the form of the PBGB Fund, to be launched this summer.
The long/short fund, which aims to have $20 million in initial capital, will focus on investing in U.S. technology and biotech healthcare concerns. “The best opportunities are going to be in technology, as the frequency of innovation has been replaced with the content-driven model,” Ross says. “We see short opportunities in the geriatric pharmaceutical space as corporate, government and global consolidation tightens margins for companies with only one horse in the race.”
“We like Apple and BEA Systems, and think benchmark biotechnology companies such as Amgen and Genentech will continue to develop innovative therapeutics, but not price appreciation,” says Ross, who has also worked with pop idols Michael Jackson and Usher. “We also believe that the new Clinton Global Initiative has quietly provided short opportunities for healthcare services in the geriatric space, such as Omnicare.”
In addition to producing music for some of the industry’s biggest stars, Ross’ resume includes trading for a $500 million biotechnology hedge fund, serving as director of institutional trading for a private investment bank (The Malachi Group), and serving as director of equity research and trading for an Atlanta hedge fund.
His entree to the financial community came via the music industry. His breakthrough debut with Boyz II Men exposed him to other artists and their managers, as well as family offices, through which he was introduced to the world of money management.
“When you’re in the music business you do several things at once such as produce a product, write for a movie and perform somewhere else,” he says. “So I would produce a product, wake up early in the morning and watch the overseas and domestic markets. Over a 12-year period I went from music to the business of music to just business,” he said.
Playing To A Different Crowd
Ross’ strategy stems as much from his musical background as from a black-box quantitative model combined with a discretionary model. “The non-linear, volatile nature of a great musical composition is very similar to security price action,” he says. “Having this base understanding can greatly assist in accomplishing inerratic portfolio design.”
Although the fund is in the early marketing stages, it has sparked interests among high-profile public pension funds and private money managers, he says. “My first gut instinct is to utilize the truth of my background and cross-industry expertise to secure state pension plans seeking a unique, conservatively aggressive approach. But being a minority portfolio manager was something that I was hesitant to highlight.”
“That changed quickly when I noticed state pension plans desired diversity of strategy, and diversity of humans. So I’m looking to promote my unique story and how this fund came about.”
Ross plans to hire a trader and research analyst for the new hedge fund, which will charge a 1.5% management fee and 20% performance fee, with a $500,000 minimum investment requirement.