Palo Alto, Calif.-based family office Judicial Capital last month launched an event-driven, long-bias equity hedge fund, using a strategy that it has run with family money with since 1999.
The fund, which was flat in its first month of trading, will focus on spin-offs and mergers and acquisitions, as well as companies with new product lines, shifts in geographic revenue mix and change in management, according to Kenneth Marshall, portfolio manager.
“The way that you outperform the hedge fund index is by seeing in certain situations an event where others don’t,” Marshall said. “So if you’re just looking at the spinoff calendar, you’ll miss some of the more significant events that’ll happen leading to enormous valuations.”
Last year, the strategy gained 23.6% and 20% in 2006. Marshall started managing family money in 1990 when TriCare, a company his parents founded, went public. His capital base expanded in 1992 when the family sold legal services startup Judicial Arbitration and Mediation Services to private equity firm Warburg Pincus.
The fund charges a 1% management fee and a 20% incentive fee. Its minimum investment requirement is $1 million.