Former SAC Manager Seeks to Link Pensions to Small Hedge Fundsby
Becker's Kiski Group provides risk management to firms
Kiski teams with Monashee to run $400 million from pensions
Kevin Becker is trying to crack a conundrum for small hedge funds: how to get institutional investors who prefer boldface names to give them money.
To lure big investors, Becker’s Kiski Group Inc. is providing small firms with the risk management that institutions seek. While the little-known firms make the investment calls for funds that Kiski starts, it oversees managers’ decisions in exchange for a share of the fees the pool brings in.
Kiski teamed with Monashee Investment Management in January to launch a hedge fund that’s raised more than $400 million from large pensions to invest in stocks of companies undergoing initial public offerings. Monashee Investment, which is led by Gerald Coughlan and Tom Wynn, started in Boston in 2011 and managed just $50 million before its tie-up with Kiski.
Becker, who has worked for Steven A. Cohen’s SAC Capital Advisors and Julian Robertson’s Tiger Management, aims to expand his partnerships. He plans to start a multistrategy fund with as many as eight outside managers in early 2016, according to a person with knowledge of the matter. Armel Leslie, a spokesman for Kiski, declined to comment on the pool.
Managers who oversee less than $1 billion struggle to supply the infrastructure and risk management necessary to satisfy a large pension or endowment, even if they produce higher returns. Eleven percent of hedge fund managers globally manage more than $1 billion, and their assets account for 92 percent of the $3.2 trillion industry, according to a study published in May by London-based data provider Preqin.
Becker started Kiski as a risk management consultancy in 2008 after working with Phil Duff, the founder of hedge fund FrontPoint Partners, at his investment startup Duff Capital Advisors. Kiski has been hired by 20 hedge funds and pensions with about $20 billion under management to analyze their portfolios.
Kiski began working with Monashee Investment in 2012 to help monitor risk prior to starting the $400 million fund, Becker said.
“They were smaller," he said. "They needed some additional infrastructure. All we’ve done is provide them with a mechanism to help them grow.”
Jeff Muller, Monashee’s chief compliance officer, declined to comment on the fund.
The test will be whether Becker can expand his model to a large number of small hedge funds. He said his firm is exploring the possibility of starting funds that focus on macroeconomic events, long-short equity and credit.