Solengo Capital—the commodities hedge fund long rumored to be under works by former Amaranth energy trader Brian Hunter—is alive, according to this promotional brochure DealBreaker obtained this afternoon. You can download it here. A quick read of the brochure—we literally received it just moments ago—reveals that it is heavy with former Amaranth employees. Of the five biographical sketches, four held their last positions at Amaranth, according to the biographies.
Hunter gained widespread notoriety after his bets on natural gas futures helped cause a meltdown at Amaranth. His quick return to the energy trading business—surrounded by former Amaranth collegues—has surprised some. Others found this comeback inevitable.
“Brian had a very good reputation. He was highly sought after,” one industry insider said. “It’s not surprising he could find people willing to give him money again. What happened at Amaranth was a rare, one-off loss that hardly erases the hundres of millions he made for people over the years.”
Solengo Capital—named after an Italian wine for reasons the fund’s managers have refused to divulge—says it will aim to capture “intellectual capital” by hiring the best portfolio managers.
“To do this, Solengo will offer perhaps the most attractive work environment in the hedge fund world,” the brochure state. “Solengo passes on up to 1/2 of the management fees to the portfolio manager. Initially this means the fund manager receives up to 1% of capital and 20% of profits.”
Of course, many readers will probably find that a risible notion. “Of course it’s a one-off event,” one wrote to DealBreaker anonymously. “Would you let me lose billions of your money twice?” The word on the street, however, is that Hunter has already raised $700 million, which means that some people may have answered “yes” to that question.
The brochure states that Solengo will have the two-and-twenty fee structure common among hedge funds, with Solengo collecting a 2% management fee on all assets under management and 20% of the profits.
Download Solengo Capital brochure[pdf]
Update: More reactions from Naked Shorts and Alphaville.
Comments (29)
Leave a comment
You can log in with your account or comment as a guest below.
so the structure is 2 and 40? i know he’s good but who is going to give up 40% carry
It looks like it could work the other way too: “portfolio manager” gets 1% while “fund manager” gets 1% AUM and 20 of the profit.
“What happened at Amaranth was a rare, one-off loss that hardly erases the hundres of millions he made for people over the years.”
Rare — what, once in his, oh, 7 year career?
Hardly erases — no, it LITERALLY erases the money he made over the years for Amaranth investors.
I think RenTech charges 5 and 4 or something like that. But I doubt that Solongnow will be charging 2 and 40, it’s probably just a typo on Carney’s part (i.e. PMs will get 1 and 10, not 1 and 20).
I mean RenTech charges 5 and 40
Ben H: Right on the money! A “rare” one-off event? His “skill” could easily have been due to randomness…he was in the right spot and the right time…there is no evidence he has “talent” beyond what one could attribute to randomness..
Ben H: Right on the money! A “rare” one-off event? His “skill” could easily have been due to randomness…he was in the right spot and the right time…there is no evidence he has “talent” beyond what one could attribute to randomness..
RTFM plz anonymous. “receives ALL (sic!) of the incentive compensation AND (sic!) a portion of the management fee” ist quite explicit, isn’t it.
“What happened at Amaranth was a rare, one-off loss that hardly erases the hundres of millions he made for people over the years.”
Wait–isn’t that precisely what his “rare loss” did, erase hundreds of millions (if not more) of other people dollars? What a fucking joke.
Wow. I warned the source that what he was saying would be controversial. He didn’t think he was saying anything unreasonable. Keep comments coming, please!
scott, that depends. If your fund is up 200% in year 1 and then down 50% in year 2, then you still made your investors a 50% return in 2 years. That’s a pretty bad return on an annualized, risk-adjusted basis, but that’s besides the point. So the question is, how much was Hunter up before he lost 50% of Amaranth’s assets in a single position? Another way of looking at is to ask how Hunter`s returns compared with the market return. These questions can only be answered with numbers. Do you have all the numbersÉ
As for the issue of randomness, there are people (such as Nassim Taleb) who believe that every return is random, meaning that all the legendary money runners were just lucky monkeys with no special skill. All I can say about that argument is that there is no possible way to disprove it. And an argument that cannot be disproved is a an unscientific argument.
I”m not a natural gas trader, but it looks like spot prices went from about $3-something to just under $15 from during the 2002-06 time frame. So, excluding leverage, I’d be interested to see if Hunter outperformed his market. I doubt it.
Anon 9:24… allow me to indulge your inner Karl Popper. Here are Amaranth’s numbers. Let’s assume for the sake of simplicity that Amaranth ex-Hunter was at worst break-even. Let’s further assume that in the “up” years, even though Harry Aurora was running energy book for most of that time, that Hunter can be ascribed the gains. Finally, let’s assume that no capital came in at the end of the great 2005 run Am had. All favorable assumptions for Hunter, ok? Here are the numbers:
2002 +11.33%
2003 +15.85%
2004 +8.04%
2005 +18.18%
2006 (61.22%) Hey whaaa haaaappend?
So you $1 at 2002 ends up at roughly $0.60 at the end of the Reign of the Solengo-maestro. That looks a lot to me like “erased gains”.
Does anyone still have a copy of the offering document? Please email it to me. I missed it, and I am dying to read it. – eimg2004@yahoo.com. Thanks
ditto, if you have a copy pls email. thx
ditto, if you have a copy pls email. thx cblu00@yahoo.com
one more ditto… tedmacgrilahan@yahoo.com
I would love to see it.
So DealBreaker got cold feet and removed the PDF file? What’s left of “Suck it up”?
The VCs backing DealBreaker probably didn’t like the idea of seeing their dollars spent on legal fees. Despite all the journalistic bravado, it’s still a business.
What are you talking about dude? The documents are right there, on the “Testing Brian Hunter’s Patience” post.
Apologies for clicking on the dead link “Download Solengo Capital brochure[pdf]” in this post…
Yeah. Sorry. That was hosted off site. We moved the brochure to a later post.
A rational good trader couldn’t raise $100,000 but the suckers always can’t resist a “shooter”. This guy is a bad bet at best, with a big ego and poor risk management at best. Beware.
A rational good trader couldn’t raise $100,000 but the suckers always can’t resist a “shooter”. This guy is a bad bet at best, with a big ego and poor risk management at best. Beware.
A rational good trader couldn’t raise $100,000 but the suckers always can’t resist a “shooter”. This guy is a bad bet at best, with a big ego and poor risk management at best. Beware.
so, is he planning to walk up the gas spread once again this year? i’m all salivating to short it once more.
Does anyone still have a copy of the brochure? Would appreciate it if someone could send it to letterkay(at)gmail.com Thanks.
http://www.reuters.com/article/internetNews/idUSN0242995420070402
If anyone can share a copy of the brochure it would be greatly appreciated.
elikhom@yahoo.com
http://www.bestsharing.com/f/cC1Z6259563