| NEW YORK, July 14
NEW YORK, July 14 Melissa Ko, a former star
trader at Bear Stearns, has formed a new hedge fund called
Covepoint Capital with nearly $1 billion in assets, according
to a letter the firm sent to investors on Monday.
Ko ran Bear's Emerging Markets Macro Fund, which generated
returns of more than 25 percent from 2005 to 2007 through
currency, sovereign debt, equity and other investing
strategies. New York-based Covepoint has assets of about $925
million, mainly from previous investors in the Bear fund.
Covepoint is the latest hedge fund to become independent
from the former Bear Stearns Asset Management (BSAM) division,
a collection of funds which held about $27 billion in assets
when JPMorgan Chase & Co (JPM.N) bought the crippled investment
bank on May 30.
BSAM was battered by the collapse of two credit hedge funds
last year that lost about $1.6 billion, a harbinger of the
harsh credit climate that continues to rock the markets. The
collapse caused investors to flee other Bear funds, including
Ko's fund, which lost some $600 million in the aftermath.
In March, star investor James O'Shaughnessy split from Bear
and took some $8.8 billion with him, although BSAM continued to
invest in the fund. JPMorgan officials have said the bulk of
BSAM funds will likely be liquidated or spun off.
A former senior Bear Stearns managing director, Ko's
Emerging Markets Macro Fund generated returns of 46.8 percent
in 2005; 25.7 percent in 2006 and 25.6 percent in 2007,
swelling its assets under management to $2.4 billion at its
peak just before the two Bear credit hedge funds collapsed,
according to previous investor letters obtained by Reuters.
Lately, however, the fund's performance has flattened. Year
to date, it was down 5.14 percent at the end of June.
Ko declined to comment.
Prior to the spin-off in June, the fund held about $1.3
billion in assets. But investors were given the option of
exiting, leaving the fund with $925 million post-spinoff.
Under the spin-off agreement, JPMorgan will get an
unspecified stream of the fund's revenues for five years,
although it is not invested in the fund. Ko began planning the
spin-off prior to BSAM's troubles last year, people familiar
with the plan said.
The launch of the independent fund comes amid a downturn in
hedge fund performance as credit-related troubles at big
financial institutions and other problems roil the markets.
Fewer hedge funds were launched in 2008 than any year since
2000, according to Hedge Fund Research (HFR), an industry
But macro investing, which seeks to trade on changes in the
world currency, bond and equity markets, is one bright spot
amid the general slump in hedge fund performance. Macro funds,
on average, returned 7.14 percent in the year through June,
Some macro funds have done spectacularly well in this
market, including the $6.3 billion Clarium LP, which posted
returns of 57.9 percent this year through June, according to an
Covepoint's prime brokers include Deutsche Bank, JPMorgan,
Goldman Sachs and Morgan Stanley.
(Reporting by Dane Hamilton; editing by Jeffrey Benkoe)
(Reuters email: email@example.com. 646 223