Larson Makes Fundraising Push For Post-Sowood Venture

Jul 25 2008 | 12:10pm ET

The founder of collapsed hedge fund Sowood Capital Management is reportedly pulling out all the stops to raise money for his new hedge fund venture.

Jeffrey Larson is fundraising for Larson/Kelleher Capital Management, a “limited leverage, value-driven portfolio,” according to marketing materials obtained by Reuters. Larson’s reemergence with LK Capital was reported last week by FINalternatives.

The new fund will invest in small- and mid-sized companies battered by the same credit crisis that doomed Sowood, which lost about $1.5 billion on fixed-income bets last year, as well as short-maturity leveraged buyout debt.

“We focus on investments with a ‘margin of safety’ and, where appropriate, attempt to further enhance risk/return profiles though the application of hedges,” Larson wrote in a written presentation.

Larson, a former money manager for Harvard University’s endowment, has been making the rounds in Boston to find investors for LK Capital.

“He has been calling virtually everyone in town, leaving no stone unturned,” one Boston-based investor told Reuters. So far, he has reportedly enjoyed mixed success at best, with one investor telling the news agency that his clients would “crucify” him if he invested with Larson, and another saying, “relaunching a problem is not for us.”

In addition to namesakes Larson and Megan Kelleher, the former legal counsel for Sowood, LK Capital has also hired Sowood alums Michelle Gillespie and Doug Francis, who joined Tisbury Capital Management after Sowood’s fall. The firm has about 18 employees.


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