Proctor Investment Managers is not your typical third-party marketer, and they don’t want to be known as one. In addition to providing hedge funds and traditional asset management firms with sales and marketing support, Proctor also takes minority stakes in the firms they represent.
“Most third-party marketers tend to take a Rolodex-type approach, but we’ll get involved as much as the managers want and allow us to,” says Jim Coley, CEO of Proctor. “There’s also a tension that exists between managers and third-party marketers because they don’t have long-term relationships with the managers and the managers feel like they own them.”
According to Coley, that tension doesn’t exist in Proctor’s client relationships because clients view the firm as an equity owner as well as a fundraiser.
Since inception in January 2006, the firm has invested in six traditional and alternative asset management firms and is currently looking to expand its coverage across the hedge fund space as well as into new geographical regions.
Proctor was formed by a lift-out from traditional asset management holding company Overture Asset Managers. Coley, who served as Overture’s CEO, says Proctor’s decision to cater to hedge funds stems from the increased correlation between hedge funds and traditional portfolios. “Their return profiles have become more like long-only managers and there is a need to differentiate themselves and get their stories out in the marketplace,” he says.
Proctor’s current geographic coverage includes the U.S., Canada, Europe and the Middle East. It has taken stakes in Aletheia Research and Management, a $5.2 billion large-cap manager with a market neutral hedge fund, Drake Asset Management, a $180 million long/short shop, and Explorer Alternative Management, a $107 million emerging manager fund of funds shop spun off from Circle T Explorer.
Proctor’s clients manage a total of some $8 billion in assets, which is a 50% increase during the first half of this year alone. “Their AUM growth—from $4.7 billion to $8 billion in 2007 alone—is a testament to the quality of their investment strategies and performance,” says Coley.
Proctor typically scouts “unique” managers with an institutional investment processes, a few hundred million in assets and a two-year-plus track record. During its 18-months in business, Coley says the firm has not had an investment go sour but he fully expects that some lemons will make their way into the portfolio over time. Currently, Proctor is doing due diligence on about 200 managers in the hedge fund space.
Last week, the firm inked a deal with Conquest Capital Group, a New York-based managed futures shop. Under the agreement, Proctor has acquired a 17.5% equity interest in Conquest for an undisclosed sum. Mona Aboelnaga Kanaan, Proctor’s president, will join Conquest’s management committee. Conquest launched a managed futures index replication-based fund in 2004 and currently has approximately $380 million in assets under management.
Going forward, Coley says he wants to invest in private equity managers as well as expand Proctor’s reach into Asia and Latin America. Also, he’s currently looking to hire a person to build out its consultant practice and is always on the lookout for someone who has experience dealing with endowments, foundations and family offices in the U.S.
On the private equity side, Coley considers Rosemont Investment Partners and Lovell Minnick as Proctor’s closest competitors. “But we’re still fairly unique in marrying the private equity focus with the marketing focus,” he says.
By Hung Tran