MHW Capital Management has recently launched a long-only hedge fund that invests in public companies undergoing major changes.
“We like to be large holders of the companies we invest in and work directly with managements and boards to make sure that their turnaround strategy is the right one,” said Peter Woodward, founder and general partner of the firm.
He added that his firm takes an activist role, representing shareholders on issues that come in front of a company’s board.
While the fund is long-only, it is structured as a limited partnership and has typical hedge fund terms, including a minimum investment of $500,000 and a 1-year lockup. The firm charges 1% for management and 20% for performance.
Woodward doesn’t focus on any one particular industry, though he favors companies that have market capitalizations between $50-100 million where profitability doesn’t rely on one product or a particular piece of legislation.
“We avoid high-tech companies,” he said. “We don’t do companies that rely heavily on very specific things, like biotech that relies on the success of one drug…or anything that is out of the hands of the company’s management or that it too difficult to understand.”
The firm currently has $5 million in assets under management, and although in the future Woodward would like to see more institutions invest in the fund, he is skeptical of whether they will be interested in his product.
“From an institutional profile, we tend to be volatile, which they don’t like, but we also tend to be uncorrelated, which they do like,” he said.
Prior to founding MHW Capital, Woodward spent almost 10 years at hedge fund firm Regan Partners in New York. In addition to a brief hiatus from the firm to get his Masters in Economics from Columbia University, he spent a year working in the White House for the Council of Economic Advisors, where he specialized in trade and finance.
MHW Capital uses Grace Financial, which specializes in small hedge fund managers, as its prime broker.