US Asset Managers Join Forces

Mike Godfrey, Tax-news.com, New York

22 January 2001

James Sheldon, former head of Oppenheimer Capital's international equity group is teaming up with the former managing director of Warburg Pincus Asset Management to launch a hedge fund shop. Sheldon and his new partner, Harry Ehrlich, decided to strike out on their own due to the bureaucratic barriers inherent in larger institutions. Orchard Capital Advisors will be launched early this year, and will be based in New York.

The pair plan to offer onshore and offshore versions of a European long-short equity fund, with the onshore fund able to invest in Japanese and European equities, and the offshore version limited to Europe. This move seems to be in keeping with the recent mood surrounding alternative investment, and Tim Shipton, head of the Linklaters investment management group observed recently that there is 'a high appetite for hedge funds in Europe of the long-short flavour.'

The funds, which will accept a minimum investment of $1m, will take long and short positions in approximately 40 stocks at any one time, and rather than focussing on the broader economic trends, will concentrate on company fundamentals when selecting stocks. They will carry a 1.5% management fee, and a 20% performance fee, but investors willing to commit themselves for a minimum 2 year period will only be charged an 18% fee.

Hedge funds have become increasingly popular with investors seeking a higher level of performance, although there is an ongoing debate surrounding the 'risky' nature of this type of fund.

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