Goldman Sachs Launches L/S Fund By Emma Trincal, Senior Financial Correspondent | Thursday, August 09, 2007 NEW YORK (HedgeWorld.com)âGoldman Sachs & Co. is moving half of its New York-based prop desk team into asset management to run a newly created long/short hedge fund expected to reach $10 billion in size upon launch. Raanan Agus, head of principal strategies, the equity desk that runs the firm's own capital, is starting the firm's first internal long/short hedge fund to be run out of Goldman Sachs Asset Management, according to a person with knowledge of the move. What that means is that the new team will run money for both the bank and its clients. Perhaps the more surprising aspect of this development is the fact that the hedge fund represents the first long/short dedicated strategy within Goldman's asset management group. Goldman's flagship fund, the $9 billion Global Alpha fund, runs a quantitative strategy. Overall, Goldman Sachs Asset Management, headed by Peter Kraus, has about $40 billion in direct hedge funds assets. Last summer, the firm launched a credit fund run by Amaranth Advisors LLC alumnus Greg Fulton, raising about $2.5 billion at launch, said the person familiar with the move. The shift of the high-profile team from principal strategies to asset management gives Goldman more money to play with and also is a way for the bank to reduce the risk exposure on its balance sheet. Unlike proprietary desk trading, which only involves the bank's own capital, hedge fund assets will come mostly from outside clients of the bank, in addition to some of the bank's money. "Investors are hungry for brands and quality risk management in the hedge fund space," said Ferenc Sanderson, senior hedge fund research analyst at Lipper Inc., a Reuters company and the parent company of HedgeWorld. "The Goldman brand offers the bank the opportunity to raise more money from institutional investors and to generate more fees and that's why they're doing it." A well-known trader such as Mr. Agus would have no difficulty launching his own hedge fund and raising $1 billion or $2 billion upon launch. It's been done by Eric Mindinch and Dinakar Singh, who respectively built Eton Park Capital Management LLC and TPG-Axon Capital Management LP, said Roger Ehrenberg, the former chief executive of Deutsche Bank's fund of funds operations, DB Advisors, in his Information Arbitrage blog. Mr. Ehrenberg is now president of Monitor 110 Inc., a New York-based research firm. The reason why Mr. Agus would decide to stay within Goldman, Mr. Ehrenberg reasoned, is that "By staying in-house and having the full Goldman asset gathering operation at your disposal, not only is the process easier [than the one involved with going independent] but the sheer amount of assets raised will likely be far greater," he said. While unaware of the details of the contract between Goldman and Mr. Agus, Mr. Ehrenberg speculated that Mr. Agus is likely to be allowed to move outside the firm and set up his own shop and team at a later stage. In exchange for this flexible arrangement, the firm would get a package of various benefits. "I am virtually certain that Goldman is getting guaranteed fund capacity; possibly preferential fees; either an implicit or guaranteed share of their prime brokerage business; serving as the asset gathering conduit for the independent fund; and maybe an option on a share of the [general partner]" wrote Mr. Ehrenberg. He added that such an arrangement, some aspects of which he did at DB Advisors, "makes sense and is fair" for both the manager and the bank. Talented bank traders are always tempted to leave Wall Street and set up their own shops where they can earn bigger fees as independent hedge fund managers. Banks constantly face the problem of retaining and giving incentives to their own talent. Moving prop desk traders into a hedge fund within the bank is one way to retain such talent, at least for awhile. "I am not surprised. Their Global Alpha fund is not doing well, and the only way for Goldman Sachs to keep its traders is to move them to fund management where there is more money and more visibility," said a French-based hedge fund manager who declined to be quoted, as he is at the early stages of launching a new venture. Some recent news reports have pointed to substantial losses in July for Goldman's Global Alpha fund Previous Reuters Story. The bank has "categorically denied" that it was shutting down the fund. Mr. Agus is bringing with him one of his lieutenants, Ken Eberts, who also comes from the principal strategies group, said the person with knowledge of the move. This person added that Goldman is merely moving talent, not downsizing its prop desk. By adding a new hedge fund and moving some of its best traders over to asset management, the bank is trying to make money in both its securities division and asset management units, said Mr. Ehrenberg. It's a simple means of diversification, but also a way to generate more revenues. In other words: business as usual. A spokesman at Goldman Sachs declined to comment.
from briefing, quoting GS' conference call: "Firm notes that their Global Alpha is down 27% YTD, of which more than half of that was last week."
Wasn't it Thorpe who came up with this statistical arbitrage technique 30 years ago have these guys not moved on?
Sorry, normally belongs to the chit-chat forum, but this one is very much compelling no to do ! Source : www.dealbreaker.com pass through Archives Posted In: pass through Carney: Unconfirmed reports of a large London based hedge fund liquidating their positions and causing serious market disruptions. Levin: Got you beat. I have reports of several grown men crying outside of Goldman Sachs. No indications why. ___________________________________________________ By John Carney | 08.16.07 at 10:57 AM18 Comments Posted In: pass through Levin: Are you still watching the vids of Burnett out in the rain? Bloomberg reporting Global Alpha hedge fund has down 26% ytd. Carney: Maybe I retired the phrase "bloodbath" too early. Levin: My bitches are canceling all their dates with Goldman guys right now. Nothing is worse than poor people talk on a rainy night. Poverty is not an aphrodisiac. ____________________________________________________ By John Carney | 08.10.07 at 04:15 PM3 Comments
never send a computer to do a mans job. haha. I dont care if I had a million or a billion..I want a person to always be in the loop.