BOSTON Jan 24 Richard Schimel, back in the
hedge fund business after the U.S. government's insider trading
probe helped force him to shut down Diamondback Capital, sees a
chance to make money in certain financial stocks this year.
Although he did not identify his picks by name, Schimel
wrote in a letter to clients that investment banks with little
exposure to fixed income trading and restructured retail focused
banks are poised to outperform their peers. A copy of the
letter, dated Jan. 23, was seen by Reuters on Friday.
The outlook for more loan growth this year could help
certain regional banks, the letter said.
Also the chance for more mergers and acquisitions, plus
share buy backs, are making certain names in the media and
telecommunications sector attractive, the letter added.
Schimel wrote that Sterling Ridge, his new firm, now has
$150 million in assets, and that it returned 1.3 percent in the
last two months of 2013, after officially launching in November.
In the first nine months of 2013, 816 new hedge funds were
launched while 608 closed down, data from Hedge Fund Research
Diamondback Capital, which once had $6 billion in assets,
was shut down in December 2012, becoming an early victim of a
broad probe into insider trading at hedge funds. Last year, SAC
Capital Advisors, where Schimel got his start in the money
management business, pleaded guilty to criminal charges of
Neither Diamondback nor Schimel were ever charged with any
wrongdoing, but the arrest of Todd Newman, a former Diamondback
portfolio manager who has since been convicted of insider
trading, prompted clients to redeem their money. Assets dwindled
to $1.45 billion.
In founding Sterling Ridge, Schimel did not reunite with any
of the men he co-founded Diamondback with, but hired one of his
former investors, Prashant Kolluri, as the new firm's president
and chief operating officer.