Incubator Lion's Path Seeks Success With Systematic Hedge Funds

Sep 22 2011 | 1:59am ET

Hedge fund incubator Lion's Path Capital, which has backed 11 long/short equity funds during its two years in business, is turning to quantitative strategies to expand its lineup.

The New York-based firm this month took a pair of quant. firms under its wing, and is preparing to bring on a third, Hedge Fund Alert reports. In addition to the standard services provided by an incubator—seed capital, office space and the like—Lion's Path is helping its nascent quants turn their paper algorithms into profitable trading systems with programming assistance.

The firm's first two quantitative incubatees are Brunswick Capital, founded by a pair of Caxton Associates veterans, and Harrington Street Advisors, led by former Knight Capital trader Clifford Titus. Both firms have been seeded with less than $5 million, with Lion's Path also taking a share of fees. The incubator, which invests only partner capital, does not take a stake in hedge fund management companies.

Lion's Path's new quantitative strategy is the brainchild of founding partners Tim Harrington and Storm Boswick, SAC Capital Advisors veterans both. The two, who are on the lookout for talent, aim to build up a stable of strategies able to produce 12%-plus annual returns that are also set up to avoid drawdowns in excess of 6%. Lion's Path also requires its directional quants to exit their investments daily.

Brunswick was founded in New York early last year, trading with money from friends and family of founders Wayne Weddington and David Noever. Weddington was head of statistical arbitrage at Caxton while Noever managed U.S. and European stocks; Noever is also a former scientist with the National Aeronautics and Space Administration.

Harrington Street's Titus, who focuses on morning trading exclusively, formerly worked at the Bank of New York and Morgan Stanley.

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