FISAM Capital hedge fund closes

Wed Mar 30, 2011 9:49am EDT

* Fund shuts after getting a large redemption-sources

* Stefan Frank founded the fund after leaving SAC Capital

By Matthew Goldstein

NEW YORK, March 30 (Reuters) - FISAM Capital, a tech-focused hedge fund founded by a former top trader with SAC Capital Advisors, closed its doors a few weeks ago after a large investor redeemed its money, said three people familiar with the situation.

Stefan Frank, a former portfolio manager with Steven Cohen's SAC Capital Advisors, founded FISAM in November 2009. The fund managed a little under $100 million, and after Frank received the redemption request he found it difficult to keep trading, these sources said.

A representative for New York-based FISAM confirmed the hedge fund was in the process of giving money back to investors and closing its operations. Frank did not a return phone call seeking comment.

In its brief life, FISAM had posted positive but not spectacular returns. A source said the fund registered about a 6 percent gain since it began trading in December 2009. The average hedge fund was up a little over 7 percent in 2010.

Frank left SAC Capital in 2008, after working for nearly a decade for Cohen's Stamford, Connecticut-based fund. At SAC Capital, Frank managed a portfolio of mostly technology stocks with a relative value of about $500 million.

Frank's long tenure working for Cohen is mostly an indication that he was a successful trader at SAC Capital. People familiar with SAC Capital said the $13 billion hedge fund has a reputation for high-turnover, as Cohen is quick to push out underperforming managers analysts.

But as is often the case, skilled traders at large hedge funds often find it is difficult to replicate that level of success when they go out on their own.

Indeed, even as institutional investors have returned to the hedge fund space, the operating environment for small funds remains difficult.

Investors and industry experts say the cost of running a hedge fund has risen in the wake of the financial crisis, as managers are now expected to spend more money on compliance systems. Hedge fund industry source say it is increasingly difficult for funds with less than $150 million in assets to thrive given the costs of paying salaries and attorneys. (Reported by Matthew Goldstein; Editing by Lisa Von Ahn)

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