Magnetar Capital LLC’s Min Htoo and Jordan Teramo plan to start an event-driven hedge fund as investor demand for the strategy helps push industry assets to a record.
Htoo, a partner at the $10 billion investment firm, will be chief executive officer of Anandar Capital Management LP, which aims to commence operations in May, according to a regulatory filing. Anandar will seek to profit from price discrepancies between equity and debt related to corporate events and can invest globally.
Hedge-fund assets surged to a record $2.6 trillion at the end of last year, driven by the best annual performance since 2010, according to a Jan. 21 report by Chicago-based Hedge Fund Research Inc. Event-driven funds, run by managers including billionaire John Paulson, can bet on takeovers, restructurings and bankruptcies, and have benefited as corporate boards have grown more active and hedge funds have pushed companies to return value to shareholders. The strategy attracted the most capital of any type for the first time since 2007, HFR data shows.
“Most of the new launches aren’t pigeon-holing themselves anymore and say they’ll invest across the capital structure, and that tends to be event-driven,” said Jay Rogers, president of Irvine, California-based Alpha Strategies Investment Consulting Inc., which advises hedge-fund clients and managers.
Event-driven funds posted a 13 percent gain in 2013, more than the 9.1 percent average annual return across all strategies, according to HFR data.
Htoo has worked at Evanston, Illinois-based Magnetar since 2005, according to a summary of the new firm, a copy of which was obtained by Bloomberg News. Teramo is a portfolio manager and has been at the firm since 2012. He previously worked at Brigade Capital Management LLC from 2006 to 2011, according to the summary. Christopher Sullivan, a former managing director and head of middle office and operations at GSO Capital Partners LP, is New York-based Anandar’s chief compliance officer.
Htoo, Teramo and Rob Terra, a spokesman for Magnetar at Hamilton Place Strategies, declined to comment.
Magnetar is known for profiting from subprime defaults in 2007 after helping create collateralized debt obligations, which package assets such as mortgage bonds and buyout loans into new securities with varying risks. The firm’s role in 2006 and 2007 in helping create CDOs has led to regulatory actions and private lawsuits against underwriters and asset managers also involved in the deals.
While event-driven strategies are attracting capital, startups industrywide declined in 2013 to 1,060, the lowest level in three years, according to a March 18 HFR report. Closures increased to 904, the most since 2009, suggesting capital raising for small-and mid-sized funds is challenging, Kenneth Heinz, president of HFR, said in the report. Event-driven startups and liquidations last year increased by the least of any strategy in both categories.