...Could a manager who lost 100% of his fund’s value ($2 bln) in two weeks solicit investors for a new fund with “all the guys on the team” that managed the old fund. And do it seven months since the massive liquidation !. In fact the head manager, Mr. Grant is still winding down another of his funds (down 57.6% for the year through May) while his letter soliciting new money for his new fund is being circulated. No I am not making this up and yes he will probably raise a lot of money. As the ft article below notes, he won’ t be the first one. Ironically, I guess the new investors have noted that the past performance of investment “geniuses” is no indicator of future results. So why not invest with a manager who displayed utter lack of risk controls in his last fund ?
Yes this one wins chutzpah award of the week
From the financial times
(my bolds) my comments in (parentheses)
Peloton investment chief plans new fund
By James Mackintosh
Published: June 11 2008 03:00
One of the founders of Peloton Partners is marketing a new fund, in the latest example of how quickly investors can forgive managers of failed funds.
California-based Geoff Grant, who was chief investment officer of Peloton, plans to launch LiquidMacro in September, seven months after Peloton's $2bn ABS fund became the largest European hedge fund failure and lost everything.
The move has prompted surprise from several Peloton investors. One called it "gutsy, to say the least".
The new fund is being selectively pitched to investors but is likely to start with money from family and friends of Mr Grant and his team of nine, who made up Peloton's Santa Barbara office.
Peloton is still in the process of shutting down its second fund, Peloton Multi-Strategy. It wrote to investors last week to tell them to expect a loss of 57.6 per cent on the dollar shares for the year to the end of May, equivalent to about $920m. It expects to pay out 75 per cent of the remaining money by the end of the month.
"Since the folding of Peloton in late February, I have been spending my time overseeing the orderly liquidation of the Peloton Multi-Strategy Fund and returning as much capital as possible to investors," Mr Grant said.
"At the same time I've known all the guys on the team I built for a long time. They want to stay with me and it would seem a shame not to give it our best shot to make that happen. I will join them on a full-time basis once the wind-down is complete."
(now this is too rich even for the alternative universe of hedge funds, as soon as he finishes winding down the fund that is down 57.6% in 5 months he will devote himself full time to managing any new money you send him...and will be assisted by the team that managed the fund that lost 100% of its assets.)
Staff at the London headquarters of Peloton, including co-founder and managing partner Ron Beller, will not be joining Mr Grant.
The sudden collapse of the highly leveraged Peloton ABS fund, which fell from $2bn to zero in two weeks, angered investors and led to an emotional apology from Mr Beller. Peloton staff and partners had put their profits from last year back into the fund and lost all their investment.
But the launch of a fund by Mr Grant is in line with many of the highest-profile failures in hedge fund history. The two biggest US failures, the $4.6bn loss at Long Term Capital Management in 1998 and the $6.6bn loss by Amaranth Advisors two years ago, were both succeeded by new funds from top traders.
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