Former Smith Barney, Merrill Broker To Launch Hedge Funds

Mar 29 2007 | 11:55am ET

Rusty Cannon, who spent the last 10 years in the brokerage industry as a portfolio manager and financial advisor for Smith Barney Citigroup and Merrill Lynch, is launching the RKC Matador Fund, an equity long/short vehicle.

According to Cannon, the fund will invest in companies across all market caps, employing the point and figure methodology along with relative strength analysis. “The fund is tactically flexible, meaning it could be anywhere from 150% long to net short, depending on indicators that I watch, so it’s not going to be a static long/short fund,” Cannon says. The new offering will start trading on April 1 with $1 million.

The RKC Matador Fund charges a 1% management fee and 20% performance fee, with a 6% annual hurdle rate and $250,000 minimum investment requirement.

Cannon plans to follow up the long/short fund with the launch in May of the RKC Matador Market Neutral Fund. That offering will have the same strategy as its predecessor fund for picking longs, but will pair its long positions with short positions in the corresponding sector ETF to “try and capture the outperformance of that stock over and above the ETF from the sector,” Cannon says, adding that the goal for the fund will be low volatility and absolute returns.

Cannon, who is currently looking for seed capital for both funds, says that while investors have been receptive to his story, it has been difficult. “I hope to separate myself from the pack as time goes along, however, I’m just another long/short manager and there are thousands of others.”


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