| NEW YORK, June 13
NEW YORK, June 13 Angelo, Gordon & Co., a $15
billion multi-strategy investment group, is stepping up its
move into "hedge lite" strategies in a move to appeal to a
broader range of investors, officials said on Wednesday.
New York-based Angelo Gordon, known for its expertise in
distressed debt, real estate, buyouts and hedge fund
strategies, is reaching out to investors with a new "130/30"
fund, joining a rush by investment managers in offering such
So called 130/30 strategies allow an investment manager to
use a limited amount of leverage and short-selling in moves
designed to boost returns in a traditional long-only fund,
which don't use those hedge fund techniques. A 130/30 fund
would use 30 percent leverage and short an equivalent amount,
giving it 100 percent net long exposure.
In recent years, large money managers like State Street
Global Advisors, Barclays Global Investors, Goldman Sachs Asset
Management and others have been launching 130/30, 120/20 and
similar strategies, designed to attract pension fund customers
that are piling into hedge funds.
"Large traditional money management firms have been
reacting to competitive pressures of hedge funds in rolling out
these strategies," said Steve Deutsch, director of separate
accounts for Morningstar Inc. (MORN.OQ), the Chicago-based fund
research firm. "The size of the universe is rapidly
In response, major hedge funds such as D.E. Shaw & Co.,
Renaissance Technologies Corp. and AQR Capital Management have
launched their own versions of 130/30 funds.
Most 130/30 funds use quantitative, or mathematical and
statistical methods, in choosing long or short stocks in a
But the Angelo Gordon fund is banking on its expertise in
fundamental research, according to Dana Troxell Jr., chief
executive of AG Asset Management, the $2.3 billion affiliate of
Angelo Gordon that is managing the fund, which started Feb. 1.
"We are fundamental investors," said Troxell in an
interview. "We make decisions on a stock by stock basis."
The move by the 19-year-old Angelo Gordon reflects a trend
by large hedge fund groups to diversify product offerings to
appeal to a broader range of institutional and high net worth
Angelo Gordon, which traces its roots as a distressed hedge
fund investor similar to Cerberus Capital Management, Apollo
Management and other industry veterans, moved into the
long-only investment world by buying ForstmannLeff a year ago.
ForstmannLeff, founded in 1968, was then controlled by
Phillip Bennett, former chief executive of collapsed
commodities brokerage Refco Inc. RFXC.DE. Troxell was
appointed to manage the unit, and the firm later brought in
John Myers, former chief executive and president of GE Asset
Management, the General Electric Co. (GE.N) fund management
Morningstar's Deutsch said with the plethora of hedge-lite
strategies coming to market, it may take some time to determine
which ones generate the best long-term success.
"Investment managers are trying to figure out the formula
that will be most appealing," said Deutsch. "Soon we will all
be able to compare the competing approaches."