‘Hot Pockets’ Family Office Launches Consumer Hedge Fund

Feb 2 2010 | 8:59am ET

The inventors of the Hot Pockets know a thing or two about consumerism. And they’re set to offer that expertise to investors in the form of a long/short equity hedge fund.

Falcon Investment Management has launched the Falcon Consumer Fund, Alternative Investment News reports. It is the first strategy that Falcon, the hedge fund arm of the Merage family office, will open to outside investors. Paul and David Merage founded Chef America, the makers of the Hot Pockets.

The new fund, which is managed by Paul’s son Richard, launched on Jan. 1 with $119 million from the Merage family office. But Richard Merage has been running the strategy since late 2007, earning about 20% last year after dropping 3% in 2008.

“What they’ve found over the last couple of years is they had a specific expertise in the consumer space, given the family’s background, network, research process and knowledge,” Christopher Ainsworth, chief operating officer, told the newsletter.

The Consumer fund will invest in about 60 consumer names across all market capitalizations, evenly split between longs and shorts. The fund focuses primarily on U.S. companies.

Falcon runs two other hedge funds, a $230 million fund of funds and a $105 million quantitative fund. Neither of those funds are open to outside investors.

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