Townsend Forms Hedge Fund as Partnership With Hill Ends

Gary Townsend, the former bank analyst and co-founder of Hill-Townsend Capital LLC, formed his own hedge fund after winding down the firm he started with Vernon Hill.

GBT Capital Management LLC plans to raise $100 million over three years to invest in financial firms, as well as markets such as Europe and Japan, Townsend said today in an interview. Townsend said he’s signed up partners, whom he didn’t name.

Townsend, 62, spent much of his career specializing in financial industry investments and plans to stick with the sector, which has trailed the broader Standard & Poor’s 500 Index since the end of 2008. He’s a former analyst with Friedman Billings Ramsey & Co. and served as chief examiner of the Federal Home Loan Bank System, according to his profile on LinkedIn Corp.’s website.

“I continue to be very interested in the financials, which I think has further room to go on the upside,” Townsend said. Markets such as Europe and Japan offer attractive valuations along with monetary easing by regulators, he said.

GBT Capital will be a macro long-short hedge fund based in Chevy Chase, Maryland, and expects to raise $50 million this year, Townsend said. The new fund was reported earlier by American Banker.

Current Picks

Townsend said he favors lenders that can increase market share through internal growth, and undervalued money-center banks because of their diverse operations such as New York-based JPMorgan Chase & Co., which he views as being among the best-run. New York-based Citigroup Inc. will benefit when emerging markets recover, he said.

Among smaller firms, Townsend said he likes New York-based Signature Bank, which he helped take public in 2004. He cited the bank’s high growth and low overhead costs.

Townsend started Hill-Townsend in 2007 with Hill, 68, who founded New Jersey-based Commerce Bancorp Inc. and later sold it to Canada’s Toronto-Dominion Bank.

The firm’s hedge funds were wound down early last year, Townsend said. The split with Hill wasn’t caused by any disagreement, he said, adding he might work with Hill again some day. Hill couldn’t immediately be reached for comment.

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