New Hedge Fund Focuses On Financial Services
Basswood Capital Management is heading "back to the future," as the hedge fund manager's director of marketing and investor relations Jim Sheehan put it, referring to the new Basswood Financial Fund that launched late last month. That hedge fund's predecessor, Basswood's flagship Basswood Opportunity Fund, a long-short financial services-based fund (with some industrials, retailers, and other non-financial services thrown in), made its debut in 1994 and has done well, last year returning 9.87% net. But Sheehan expects the new hedge fund, focused exclusively on U.S. financial services firms, to do even better, producing net returns in the high teens.

"Basswood has been managing money for over 20 years and we have seen the financial cycle twice, made good money the first time, when we came out of the S&L crisis, and anticipate doing the same this time around," said Sheehan, adding that "right now, given where the cycle is in the financial sector, we think it's a very attractive entry point."

Basswood's founders and fund portfolio managers-Matthew and Bennett Lindenbaum, identical twin brothers who have worked together since 1989-see within the financial services sector a "huge coming wave of recapitalizations, normalization, and consolidation," Sheehan explained. "We believe those three thematics can lead us to much higher net rates of return in this near term, so we do think there's an opportunity set here for the next couple of years to make some high returns in this space."

The Basswood Financial Fund, which debuted with $25 million (a combination of investments from some existing family office investors and internal capital), invests in about 70 names, 30 long and 40 short, across all market capitalizations-a mix of banks, thrifts, financial institutions, brokerages, some insurance brokers, as well as REITS. "The whole gamut of financials," said Sheehan. In comparing the old fund to the new, the company's original Basswood Opportunity Fund maintains about 70 long positions and around 80 short positions, making the new Basswood Financial Fund "a slightly more concentrated portfolio." Sheehan believes that this concentration along with "taking a little bit more market directionality" are among the factors that will help make the new fund's expected returns possible.

Opened by the Lindenbaum brothers (both 1986 graduates of Brandeis University) in 1994 as a U.S. long/short equity hedge fund manager, Basswood Capital Management is headquartered in Manhattan with a staff of 14, and currently has about $400 million in assets under management. Their new hedge fund has a capacity of $500 million, and has several share classes with differing fees and liquidity terms. Morgan Stanley and BNP Paribas serve as prime brokers. Go to www.basswoodpartners.com for further information.

In other news ...

Chanticleer Holdings Inc., a publicly traded holding company in Charlotte, N.C., that operates two wholly-owned subsidiaries-Chanticleer Advisors, an investment manager, and Avenel Ventures, a consulting firm-has launched the new Chanticleer Foundation (CF), a donor-advised fund that allows individuals to create their own foundation for philanthropic gifts and donations. The minimum contribution is $100,000, with an annual fixed service fee of 1.5%; the minimum grant amount is $500.00, with a minimum grant distribution of 5% of the DAF balance as of January 1 of each year, according to Chanticleer. Go to www.chanticleerfoundation.com for further information.

The wealthy should pay the largest portion of U.S. taxes, according to JPMorgan Chase Chief Executive Jamie Dimon, as reported by Reuters on April 5. Dimon spoke in regard to the then-unresolved U.S. budget. "I for one have no problem, as a well-off American ... paying taxes," Dimon told the annual spring meeting of the Council of Institutional Investors, adding, "I think those well off should pay a lion's share, I have no problem with that. But I think we [the federal government] can't just go on endlessly spending money."

State Street Global Advisors in Boston, in collaboration with Knowledge@Wharton, an online resource of the Wharton School, has released "Taking on the Role of Lead Advisor: A Model for Driving Assets, Growth and Retention," a research report that explores the relationship between investors and financial advisors following the recession, using best-practices data mined from advisors serving the ultra-high-net-worth. Go to www.spdru.com for further information.

GoodHaven Capital Management LLC, which focuses on high-net-worth individuals, institutions, and retirement investors through offices in Miami and Millburn, N.J., has launched the GoodHaven Fund, a no-load mutual fund in keeping with what co-founder and portfolio manager Keith Trauner called the company's "long-term value approach and the common sense investment principles we use to manage our own money." The minimum initial investment is $10,000 for regular accounts and $2,500 for retirement, tax-deferred, and UGMA/UTMA accounts. Go to www.goodhavenllc.com for further information.

Guggenheim Funds Distributors Inc., headquartered in Chicago and New York, has commissioned Dorsey Wright & Associates of Lisle, Ill., to develop a set of reports focusing on unit investment trusts, marking the first time a third-party research provider will cover the asset class, said DWA. The inaugural report, "Guggenheim Funds UIT Report," is available to financial advisors via their DWA subscription. DWA (www.dorseywright.com) will produce a variety of UIT resources for advisors, including: weekly UIT reports, original UIT commentary, as well as evaluation tools analyzing the underlying holdings of UIT from DWA's Point & Figure perspective, according to Guggenheim (www.guggenheimfunds.com/uit).

Research and Markets, headquartered in Dublin, has released the sixth edition of its "Wealth Management & Private Banking Review," which examines wealth management and private banking issues and developments at an international level. Topics include business and ownership succession for the ultra-high-net-worth, and the review serves as a source of information on the market and its key players, according to the company. Go to www.researchandmarkets.com for further information.

Mercator XXI LLC, which helps clients "execute growth strategies in the global economy" from the firm's offices in Washington D.C. and Cairo, has released its 2011 Triangle of Opportunity market analysis tool, a publication which highlights what Christopher G. Caine, Mercator XXI's president and CEO, calls the "potent and growing economic potential" in China, India and the Middle East, as well as Africa. For further information, go to www.mercatorxxi.com.

Between 1948 and 1979, the richest 10% of families in the U.S. claimed 33% of average income growth. Between 2000 and 2007, the richest 10% claimed a full 100% of average income growth in the U.S., according to the Economic Policy Institute. Today the top five 5% of U.S. households claims 63% of the entire country's wealth, while the bottom 80% holds just 13% of the growth, said the institute. According to The Financial Times, there are now more people living in poverty in the U.S. than at any time in the last 50 years.

Bernstein Global Wealth Management has launched a Web site designed to help endowments and foundations meet the challenge of reduced investment portfolios with increased demands on grant-making. Featured are research reports that provide insight into an area that is often given short shrift by nonprofits and their financial advisors: matching spending policy and asset allocation to the organization's mission, and four webcasts designed to help virtually any type of non-profit organization, according to Bernstein. Go to www.alliancebernstein.com/nonprofits for further information.

The Conference Board's "Measure of CEO Confidence," which had bounced back in the final quarter of 2010, improved further in the first quarter of 2011, according to the non-profit research association. In assessing their own industries, business leaders were positive, with nearly 61% of those surveyed saying conditions have improved, compared with 55% in the fourth quarter of 2010. Half of CEO's expect hiring to increase. Go to www.conference-board.org for further information.

Investment managers with strong capabilities in global and emerging markets equities, hedge funds and funds of hedge funds, private equity, and real assets are in most demand this year from retirement plans, endowments, foundations and other large investors, according to the recent 2011 Consultant Search Forecast, conducted jointly by eVestment Alliance and Casey, Quirk & Associates and containing data culled from 55 leading investment consulting firms in the U.S. and Canada responsible for $10.4 trillion in AUA. Among trends that were noted: More than 80% of investment consultants are expected to look outside the U.S. in 2011. To view the full report, go to evestment.us1.list-manage.com.

Driven by a small number of funds that held large closes, U.S. and European private equity fund-raising rebounded in 2011. According to Dow Jones LP Source, U.S. private equity funds secured $31.6 billion for 89 funds during the first quarter, more than double the $13.5 billion raised for 81 funds during the same period last year; mezzanine debt is the only investment category in the U.S. that experienced a decline. European firms collected $8.2 billion during the quarter, up 39% from the $5.9 billion raised a year earlier, although the number of closings declined to 22 from 32, according to the data. Go to privateequity.dowjones.com for further information.

Events

TowerGroup's 17th Annual Conference-"Sustainable Innovation in Financial Services: Driving Business and Technology to Achieve a Competitive Advantage"-is being held April 13-15 in Boston. Go to www.towergroup.com for further information.

ATHENA International's 17th Annual International Leadership Summit-"Advancing Women's Leadership: Leading with Impact"-will be held May 2-3 at the Mid-America Club in Chicago. The event attracts hundreds of women leaders from all over the world. Go to www.athenainternational.org for further information.

The 3rd Latin America Mid-East Investors Forum, hosted by LatinFinance, will be held May 9-10 at the Park Rotana Abu Dhabi. The forum is for private equity funds, family offices and others with an interest in accessing Latin American assets. Go to www.freelf.com/lameif.pdf for further information.

SPAC Conference 2011: the State of the SPAC Market, hosted by DealFlow and scheduled for May 23 in New York City, examines the next generation of SPACs and explores the structural changes that will impact sponsors, investors, potential targets and foreign private issuers. Go to www.dealflow.com/conferences for further information.

The St. Petersburg International Economic Forum 2011, carrying the theme "Emerging Leadership for a New Era," will be held in St. Petersburg, Russia on June 16-18. Go to www.forumspb.com for further information.

On The Move

Harris Private Bank has appointed Sandra Fuentes to the position of vice president, senior portfolio manager; Eileen Minnick to vice president, senior trust administrator; and Deborah Withington-Turner to trust administrator. All previously were at Wells Fargo, and are assigned to Harris' office in West Palm Beach, Fla.

Hopkins & Carley, a law firm based in San Jose, Calif., that serves businesses and high-net-worth individuals, has hired estate planning and tax attorney Francis W. Dubreuil to serve in the family wealth and tax planning department in Palo Alto. A former national managing director of Bernstein Global Wealth Management, Dubreuil joins as a shareholder. The firm has also named Charles H. Packer co-chair of the practice, joining estate planning attorney James V. Quillinan to lead the firm's growing family wealth and tax planning practice.

Highbridge Capital Management LLC, a New York-based alternative investment management firm, has named Todd Builione the firm's chief operation officer, president and COO. Prior to joining Highbridge in 2005 as the firm's first head of corporate strategy and before being promoted in 2009 to COO, Builione worked in the Financial Institutions Group at Goldman Sachs.

Nelson Roberts Investment Advisors LLC of East Palo Alto, Calif., has acquired Sylvan H. Kline Jr. Inc., an RIA in San Francisco, in a move that puts the combined firm's AUM at about $275 million. The deal was managed by Advice Dynamics Partners, a San Francisco-based consultancy for financial advisors.

The Lubitz Financial Group, headquartered in Miami, Fla., has hired Elaine King as managing director of wealth planning. Previously, King created and directed the Wealth and Well-Being Institute, a platform for high-net-worth families, at Gibraltar Private Bank & Trust.

Tiedemann Wealth Management LLC of New York City has hired Wolfgang Traber as a member of the firm's investment committee and appointed James Bertles to the board of directors of the Tiedemann Trust Company. Traber is currently the chairman of Hanseatic Corporation, a global private-equity firm, and previously held leadership positions at Deltec Securities Corporation and affiliates. Bertles currently serves as managing director of Tiedemann Wealth Management. Before joining Tiedemann, he was president and chief operating officer of Brown Brothers Harriman Trust Company N.A.

Washington Wealth Management LLC of Middleburg, Va., has hired Jordan Ball as a regional vice president for the firm's newly launched Richmond office. A 45-year financial services industry veteran, Ball most recently served as the senior managing director of Scott & Stringfellow's Richmond office, and has held senior management positions at Paine Webber.

Boston Private Bank & Trust Company, which serves affluent individuals, their families, and institutions and manages assets for numerous non-profits, has appointed Kelly C. (McManus) McKernan to the position of vice president and portfolio manager in its investment management and trust group.

-Cort Smith