Hedge Fund To Beef Up Emerging Manager Platform

Mar 7 2008 | 12:01am ET

New York-based Finvest Asset Management has big plans for its multi-strategy hedge fund this year. The firm is looking to add 15 emerging managers to its $250 million Finvest Yankee platform, which currently invests in 21 underlying managers. 

The U.S.-centric fund, which allocates between $5 million to $20 million to each emerging manager in a managed account format, currently has exposure to equity strategies including convertible arbitrage, merger arbitrage, equity market neutral, event driven, long/short equity, short bias, managed futures, distressed and high yield.

“It’s pretty diversified and what that means is the end of the day we have a portfolio that’s delta neutral,” said Gad Grieve, principal, adding that the fund is looking at various managers in Europe and Asia for its new mandates.

Finvest Yankee is also about to get a little bigger thanks to a commitment of $50 million by an existing investor, according to Grieve.

The fund launched in June 2007 and finished its first eight months up over 21%.

Finvest In Wonderland

But while Finvest Yankee is off to a good start, not everything has gone swimmingly for the rookie fund. A few weeks ago, an unidentified long/short manager in the fund found himself in hot water after it was discovered that he was misrepresenting himself to investors by claiming that he was trading his own personal funds when, in fact, he was trading under Finvest’s name. His investors then sued him and reported him to the Securities and Exchange Commission. The actions resulted in a court ordered freeze of the manager’s account, which, of course, belonged to Finvest.

“And once that account was frozen, it just triggered a small margin call, which was rectified almost immediately. It didn’t affect the fund and the whole thing happened in one day,” said Grieve, who likened the episode to something straight out of the fairytale “Alice in Wonderland.” 

Grieve added that the firm immediately fired the manager, who had been trading for the firm for about two months. Ironically, Grieve said the manager did make a significant profit for the fund during his brief stint with Finvest.

Finvest currently manages $400 million in total assets in two hedge fund vehicles.

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