Hedge Fund Rangeley Soars 73%, Begins Fundraising Push

Jan 27 2010 | 11:08am ET

It’s been an up-and-down couple of years for hedge funds. For Rangeley Capital, it’s been much more of the former than the latter.

The three-year-old New Canaan, Conn.-based hedge fund has begun seeking outside investors for the first time, and potential clients will no doubt be hearing about its 73.6% return last year. The firm has also launched a charitable organization that will focus on health and educational causes.

Rangeley, which specializes in event-driven strategies, took its first outside money earlier this month. Co-founder Chris DeMuth and partner Richard Townsend said they expect to keep the fund open to new investment through this year, and that the fund will close at $100 million.

DeMuth said Rangeley is primarily targeting family offices and individual investors, although the firm already boasts one fund of hedge funds as a client.

“We invest only when there is a limited downside,” DeMuth said. “Additionally, we like to know how we are getting our capital back, so we look for a corporate event that will unlock shareholder value.”

Rangeley, like most hedge funds, stumbled a bit in 2008. But its losses were below the industry average, and its 2009 performance more than wiped out that red ink. The firm’s concentrated portfolio of between 15 and 20 names focuses on mispriced securities and corporate events. Rangeley charges 1.5% for management and 20% for performance, with a $1 million minimum investment.

As they were closing out their best-ever year, DeMuth and Townsend were also beginning to give back. The firm has established the Rangeley Community Fund, which will receive 10% of the general partnership’s profits. The charity will give to “causes with practical or material impact,” such as charter schools.

For the time being, RCF is keeping its philanthropy local. But DeMuth said that, as it grows, it will begin to give beyond Connecticut.


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