Context Capital Ups Bet On Betzwood

Jun 15 2011 | 2:03pm ET

Context Capital Partners has upped its investment in Betzwood Partners, David Sung’s market neutral, media, telecom and technology-focused hedge fund.

Pennsylvania-based Context first seeded Sung’s fund in 2010 with what Karen Batchelder calls “a small investment.” Batchelder, a director at Context, says this June the firm allocated an additional investment of $24 million, bringing Betzwood’s total assets under management to $25 million.

Batchelder says Context’s executives have had a “long relationship” with Sung, who has managed the same market neutral strategy for five-plus years.

Sung “was a prop trader at Susquehanna International Group here in Philly,” Batchelder told FINalternatives in a recent phone interview. “He traded the exact same strategy for three years there—‘06, ‘07 and ‘08—and had a pretty tremendous track record through market choppiness.” The strategy returned 10.1%, 5.5% and 6.6%, respectively, during those years, 27.3% in 2009 and a more modest 0.7% in 2010. Through May, the fund is up 5.0% in 2011.

Sung left Susquehanna at the end of 2008 and started Betzwood in early 2009. Now that Betzwood's assets are at $25 million, says Batchelder, Context is focusing on raising external capital for the fund.

“We think that market neutral is really attractive right now given the sort of sideways nature of the broader equity markets,” she says. “He is consistently beating his hedge fund market neutral index and the overall hedge fund index and is having a strong 2011.”

Betzwood is the first hedge fund Context has seeded, but the company also has three private equity funds focused on real estate and community banks. Says Batchelder, “We develop investment ideas and seed them and then go out and raise third-party capital.” While the community bank funds are fully allocated, Context is raising capital through separately managed accounts.

Context, with approximately $350 million in capital under management, provides what Batchelder characterizes as “marketing and administrative support” for the funds it sponsors. Ron Biscardi, Context’s managing director and founder, sits on the investment committees for each of the private equity funds.

Context’s plans for the future, in addition to direct investments in other hedge funds and investment opportunties, include talks with other institutional investors with an eye to establishing what Batchelder calls “a seeding fund of funds.”

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