Semiconductor Expert Gears Up To Launch Niche Fund

Aug 11 2006 | 12:00am ET

ChipInvestors Group is readying to launch a long/short hedge fund that will invest exclusively in semi-conductor companies. “We believe that we are one of the very few, if not the only, investment funds that is structured like a hedge fund and is focused 100% on the semiconductor space,” said Manoj Nadkarni, founder and portfolio manager of the Washington State-based firm.

The fund, ChipInvestor Partners L.P., is set to launch Sept. 1. Nadkarni explained that the firm’s investment approach is twofold. First, it will take a macro-approach to analyzing the industry and where it is in its cycle of growth, and second, it will take a bottom-up approach, evaluating the fundamentals of each company in which the fund invests.

“Semiconductor companies are enablers of technology, they drive the whole technology sector,” said Nadkarni, who, before forming a Registered Investment Advisor earlier this year ran a research publishing firm from 1999 to 2005 that focused on the semiconductor space. Prior to that, the MIT-educated engineer worked in the semiconductor industry for over 12 years. Nadkarni believe that his long-history and inside knowledge of the industry will give him and his firm an edge when it comes to evaluating investments.

The minimum investment in the new fund is $1 million for institutions and $250,000 for high-net-worth individuals. The lockup period is three years. Nadkarni decided upon a three-year lockup because the industry is cyclical and he does not want investors to flee at the first sign of trouble in the sector.

“The first time we have a panic, we would get notices of redemption, so it is in the best interest of the limited partners to have a 3-year minimum lockup,” he said.

Fidelity Investments is serving as the prime broker for the new fund. Holland & Knight is providing counsel. The auditor is Harb Levy and the administrator is NAV Consulting.

“This fund is well suited for any investor who wants to put a small portion with a sector specialist,” said Nadkarni.  

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