New York-based Horton Point, a quantitative hedge fund shop, is looking to give institutional investors a 360-degree view of hedge fund strategies with its maiden offering. The firm is readying its Gallery Fund, a global multi-strategy hedge fund, for launch toward the end of the year.
Dimitri Sogoloff, founding principal of Alexandra Investment Management, and Vladimir Finkelstein, a former managing director at Citadel Investment Group, founded Horton last year with a mind to addressing the issue of scalability and repeatability of alpha within the hedge fund space. “We decided a year ago that, in order for a quantitative business to be sustainable, it cannot rely on a single model or single asset class, and it needs to be about a quantitative process rather than a model,” said Sogoloff, who serves as the new firm’s CEO.
To that end, Sogoloff has put together a team of financial engineers from bulge-bracket banks, including JPMorgan and Lehman Brothers, and scientists with expertise in statistics, mechanics and plasma physics to applied mathematics and artificial intelligence. “Unlike some shops that put together teams of scientists without any financial backgrounds, such as Renaissance Technologies,” he said, “we thought it would be a robust exercise to combine professionals who have been doing it for a living for many years with people who come into the world of finance completely new from sciences that have a lot of potential relationships with finance.”
The fund will employ algorithmic strategies in equities, volatility, fixed-income arbitrage, credit arbitrage, reinsurance and weather-related markets. Sogoloff, who dubs the last two “risk transfer” strategies, where business users transfer the risks to financial users, is also the firm’s chief risk officer, while Finkelstein will serve as the firm’s head of research and senior portfolio manager of fixed-income trading.
Sogoloff declined to say how much capital the fund will launch with, saying only that the firm is currently speaking with a very small group of institutional investors. “We estimate a day-one capacity of $500 million,” he offered. He also declined to say if either Alexandra or Citadel will invest in Horton’s new offering.
The Gallery Fund will charge 2% for management and 20% for performance, with a $5 million minimum investment requirement.