Holding Capital Gears Up To Launch Two Funds

Mar 10 2006 | 12:00am ET

By Deirdre Brennan 

While many Wall Street executives dream of making millions and retiring at an early age, Sash A. Spencer, a spry 75, isn’t slowing down anytime soon. In fact, his leveraged buyout firm, Holding Capital Group, is gearing up to launch a series of hedge funds, and Spencer is leading the charge. In the coming moths, Holding Capital is launching a hedge fund in partnership with a venture capital firm; ramping up marketing efforts to bring U.S. investors into an existing Hong Kong hedge fund; and launching a long/short Russia-focused fund.

Holding Capital, which was founded in 1975, has primarily been in the business of buyouts, acting as a principal in over 200 acquisitions and other investments totaling $3 billion in value. The firm currently manages one fund-of-hedge funds— Conservation Securities International—which has $80 million in assets under management, all of it belonging to the firm’s partners. Holding Capital is now gearing up to open this fund to outside investors in the second quarter and at the same time launch a separate, parallel fund—Conservation Securities Diversified.

Wymen Chan, an investment analyst at the firm, said the new fund will launch with between $10-20 million, but has the capacity to take in up to $500 million. The firm is teaming up with JH Whitney & Co., one of the oldest venture capital firms in the U.S., to create the new offering. The firm’s current fund-of-funds invests with 50 managers across all asset classes, though according to Spencer, it is heavily weighted toward some sectors, including emerging markets, energy and precious metals. Last year the fund returned more than 18% net of all fees.    

Holding Capital Bullish on Russia, Asia

Spencer, who spent his childhood in the Philippines and lived through the Japanese occupation during World War II, isn’t afraid of investing in regions that many others balk at, such as the Ivory Coast and Zimbabwe. In fact, he is particularly fond of Russia, which many investors have fled from in recent years.

“Bargains are getting tougher to find [in Russia], but the market is still undervalued,” he said. “Russia has much better growth and fundamentals than the U.S. does.” He explained that official figures for growth in Russia are grossly understated because the country is a cash economy— “nobody uses checks and credit cards.”

The firm is currently gearing up to launch its Russian-focused fund, Karma Capital, which will be a long/short equity fund. Chan expects to launch with less that $10 million in assets under management. The firm is also setting up an offshore entity for the Karma Capital fund because of interest from overseas investors.

Meanwhile, the firm is continuing to expand its focus on Asia by targeting U.S. clients for an existing Hong Kong-focused fund, which is run by Hong Kong-based Value Partners. This Asia push comes close on the heels of a fund that Holding helped set up in Singapore last year, which now has $700 million in assets under management and is currently closed to new investors.   

Spencer Makes His Own Rules

In terms of an investment philosophy and style, Spencer likes to pave his own path, preferring to avoid what others are doing. He also isn’t a big fan of rules, unless they are his own. “We break the rules set by institutional investors,” Spencer said grinning, such as “only invest with managers with a track record.”

He said that some of the fund-of-fund’s best managers are ones the firm placed money with on day one. “We invest with startup managers all of the time,” he said.

He also has some scathing words for the Securities and Exchange Commission believing that the new rules requiring hedge funds to register basically add up to big brother protecting the rich.

“The cost of this for hedge funds and the public is far greater than the sum total of all the hedge funds that have imploded,” he said, adding that the taxes of hard working people, such as steelworkers, are now being spent to enforce them. “Regulation is a scandal,” he said.

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