(Bloomberg News) -- Stephen Diggle, who co-founded a hedge fund that made $2.7 billion in 2007 and 2008, plans to open his personal farmland portfolio to investors and start a fund that will trade life-sciences companies.
Diggle will transfer the farm assets from his family office to Singapore-based Vulpes Investment Management, which he set up in April after liquidating his previous firm's volatility funds. Diggle's family also holds "significant stakes" in life sciences, including biotechnology companies, which will be moved to a fund he plans to set up next year, the 47-year-old said.
"Everything that we are investing in personally is available to investors," Diggle said in an interview. "We have got capital committed, we are focused on a number of things where we think there's a compelling opportunity to make money."
Diggle is widening his new firm's investments after starting a volatility fund in May and taking over the Russian Opportunities Fund and Testudo Fund from Artradis Fund Management Pte, which he and co-founder Richard Magides closed in March. Once Singapore's biggest hedge-fund manager, Artradis's funds, which sought to profit from price swings, lost $700 million as volatility declined in 2009 and 2010.
"The one thing I didn't want to do was to spend the rest of my life talking about how great 2008 was," Diggle said. "You have to move on and find new challenges. That's what gets you up in the morning."
Vulpes, which focuses on alternative investments, started its long Asian volatility and arbitrage fund, LAVA, on May 1 with $30.5 million, of which $30 million was the founding partners' money. The fund size has increased to about $50 million after some of Artradis's former clients returned to invest Diggle. The fund has gained 6 percent since May, he said.
LAVA seeks to produce returns that aren't correlated with the market by trading instruments that thrive on volatility, such as options, warrants, and convertible bonds. The fund uses strategies such as arbitraging or profiting from disparities in the price of similar securities simultaneously traded on more than one market, and tends to work well when markets go down.
"The cost of being long volatility on a daily basis as a buy and hold strategy is not going to make money in the next few years," Diggle said. "You have to be more deft in your timing and more selective in what you own."
Diggle plans to transfer ownership of his farmland into a holding company, in which outside investors can hold shares, he said. Vulpes, which currently manages about $200 million, will own and operate the company. After buying farms in Uruguay and Illinois, as well as a kiwi-and-avocado orchard in New Zealand, he plans to pour money into Africa and eastern Europe as global food prices soar.
The value of farmland in the U.S. has probably gained 20 percent to 30 percent in the last two years, while Diggle's investments in Uruguay may have risen 50 percent as sheep and cattle prices almost doubled in Latin America this year, he said.