UPDATE 1-Ospraie Management partner Snellings to start new firm
By Svea Herbst-Bayliss
BOSTON, July 12 (Reuters) - Ospraie Management partner Will Snellings, who specializes in picking stocks at the $1 billion commodities-oriented firm, is launching his own hedge fund with the blessing of his boss, Dwight Anderson.
Snellings, a six-year Ospraie veteran, will start to accept money from outside investors for his Marianas Fund this month, according to a presentation obtained by Reuters.
The minimum investment is $1 million, standard for many hedge funds.
Since March 2012, Snellings has run a long/short equities and commodities portfolio at Ospraie.
That portfolio, the Marianas Strategy Program, returned roughly 17 percent last year and is up 8.12 percent this year, outpacing the average hedge fund's 3.6 percent gain in the first half. The broader Standard & Poor's 500 index gained 12.6 percent. At the end of April Marianas has $37 million in assets, according to the prospectus.
Now it will be part of Marianas Fund Management which will remain, for a time, an affiliate of Ospraie. A spokesman for Ospraie declined to comment. Snellings could not be reached.
With growing fears that the Federal Reserve's easy money policy will eventually end and make bond investments less attractive, industry analysts expect hedge funds specializing in so-called long/short equity strategies to see a flood of new money in the second half of the year.
Snellings' split from Ospraie is being cast as a carve out which is being called amicable, according to a personal familiar with the firm. Anderson will be writing his partner the biggest check he has ever handed to a new manager.
The two men will continue to work in the same Manhattan office building and Marianas will have full use of Ospraie's infrastructure and resources, the prospectus says.
Laying out his investment strategy, Snellings said he will make roughly 15 to 20 bets on "great businesses" in low and higher risk industries. Those will be balanced out with as many as 25 short positions, or bets against "high risk, really bad businesses." A small portion of the portfolio, about 8 percent, will be allocated to long or short commodity investments, the prospectus said.
As the $2.25 trillion hedge fund industry matures, ever more managers are spinning out of established funds, often with financial support of their former bosses.
In April, Michael Pausic announced plans to leave Maverick Capital and open his own fund while Scott Ferguson left Pershing Square Capital Management last year to launch his own business. Also last year, John Duryea left Ospraie to start private equity firm Blue Road Capital.
In the prospectus, Snellings, who earned an undergraduate degree from the University of North Carolina and an MBA from the University of Virginia, said he will charge a 1.5 percent management fee and a 20 percent performance fee, again fairly standard in the hedge fund industry. Investors will be permitted to get their money back four times a year after giving the fund 60 days notice.
Snellings wrote in the prospectus being sent to potential investors that "fund investments will be made as if they are our personal investments," and added "we will never cut corners on ethics or compliance."