KKR, Alaskans Only Interested In Investing In The Things You *Really* Think Will Make Money - Dealbreaker

KKR, Alaskans Only Interested In Investing In The Things You *Really* Think Will Make Money

The firm has started a new fund for its best ideas, as opposed to the merely good ones.
Author:
Updated:
Original:

No, Al: Your BEST idea. The E equals one, you know.

KKR’s in-house fund of hedge funds has been doing some thinking. It figures that the job of the hedge fund manager is to make lots of money, and the way to do that is to invest in things that he or she thinks will make lots of money. And it stands to reason that, given those premises, the smart hedge fund manager will invest more in things that he or she thinks will make more money than other things that he or she thinks will make money. Therefore, if you have a good hedge fund manager—and Prisma Capital Management has $10 billion that says it’s pretty good at picking a hedge fund manager—and you invest a bunch of extra money in those manager’s “best ideas,” this should make one a very great deal of money. This is the kind of radical thinking that gets the Alaska Retirement Management Board to consider giving you another $100 million.

KKR Prisma created the strategy in January to invest in some of the highest conviction -- or largest -- holdings from 14 equity-focused hedge fund managers, according to a presentation dated April 23 to the Alaska Retirement Management Board. The pension system had $420 million with KKR Prisma as of March 15 and was scheduled to vote on whether to allocate as much as $100 million to the KKR strategy….

The single largest long positions of hedge fund managers gained more than other picks, KKR said in the Alaska presentation, citing research it had conducted on portfolios from 2004 through 2014. The new strategy will be based on managers’ three largest picks.

KKR’s $10 Billion Prisma Capital Starts Best Ideas Hedge Fund [Bloomberg]

Related

Hedge Funds

The Only Thing That Keeps Phil Falcone Up At Night Is Counting All The Money He's Going To Make Off Of LightSquared

From outward appearances, the past couple years have been a stressful time for Phil Falcone. After making billions of dollars for himself and for his investors on subprime, the Harbinger Capital Partners founder provoked the ire of many a client by tying up a good chunk of their money in a wireless start-up called LightSquared (a company the Federal Communications Commission is no fan of, due to the fact that it reportedly interferes with GPS devices used on land, sea, and in outer space), by borrowing $113 million from a gated fund in order to pay personal taxes, and by only allowing certain investors (Goldman Sachs) to get out while freezing redemptions for others and then telling them they could leave if they found some else to pick up their stake. Assets under management at Harbinger have dropped $23 billion, from a peak of $26 billion. For a variety of reasons, the Securities and Exchange commission wants to see him banned from the industry. A worried Bloomberg News reporter recently revealed he has a problem with pit stains ("[his] shirt appeared darker under the arms in his office last month"), which wouldn't pose an issue were his shirt supply not dwindling rapidly ("One place Falcone is visiting less frequently is Domenico Vacca, the New York boutique where suits retail for $3,900 and shirts $490, according to a person with knowledge of his purchases. He orders every four or five months [now] compared with every two or three months between 2006 and 2009"). For all these reasons and more (like, say, a sensitive and highly-strung pig who is not happy), some people might assume that Falcone would at best be in deep contemplative mode regarding how things got this far at worst be freaking the fuck out, particularly over the possibilities that 1) the SEC is going to file civil fraud charges and 2) if LightSquared doesn't pan out, he's going to lose a whole lot of money. Those people, however, would be wrong. Not only is he not at all worried that his passion project won't work out ( “I am not losing sleep on this -- why would I lose sleep?” he asked Bloomberg), but he dares anyone to come up with a reason for why he's not going to make $20+ billion on this thing. “This is not for the faint of heart,” Falcone said. “I’ve never looked at it as having $4 billion or $25 billion as defining Philip Falcone. But who’s to say I won’t get back to $25 billion?” What? It could happened. You don't know. Falcone Waits for Icahn Doubling Down on Network [Bloomberg]