EXCLUSIVE: Ex-Goldman fund star Carhart to launch firm

NEW YORK (Reuters) - Former Goldman Sachs Group Inc GS.N star hedge fund manager Mark Carhart, who departed last year after the Global Alpha fund he co-managed struggled, told Reuters on Thursday that he is starting his own firm and trying to raise $1 billion for a new investment fund.

Carhart, speaking on the sidelines of an industry conference, said he plans to launch his new firm in 2010 and is targeting big pension funds and other institutional investors. Ultimately, he said, he hopes the firm will manage as much as $5 billion in the computer-driven investment strategies he plans to offer.

Carhart is the latest in a string of Goldman Sachs money managers to strike out on his own. He is also one of a growing number of fund managers launching new firms in the aftermath of last year’s market meltdown.

It is not an easy task. Hedge fund industry experts say even the most talented money managers and traders have found it difficult to raise the kind of eye-popping money routinely collected when markets were booming as recently as two to three years ago. Today, funds are told they should be satisfied with $50 million to $100 million, until markets fully recover.

Investors are still skittish about putting new money into hedge funds one year after a roughly $2 trillion industry posted its worst-ever results, sinking by roughly 40 percent and seeing record amounts of assets pulled out.

Working in Carhart’s favor will be his Goldman Sachs connections, a pedigree many would-be investors consider an indication of future success. Eric Mindich, for example, spun out of Goldman to create Eton Park, which for a time held the record for the biggest-ever hedge fund launch.

“There is nothing better on a would-be hedge fund manager’s resume than the name Goldman Sachs,” said Larry Smith, chairman and chief investment officer at Third Wave Investors.

Even before Goldman, Carhart’s resume was gold-plated.

After earning his undergraduate degree at Yale University, Carhart moved on to the University of Chicago, where he earned a PhD in finance. He soon followed fellow Chicago alumnus Clifford Asness, who now runs hedge fund firm AQR Capital, to Goldman.

That said, it remains to be seen whether investors focus on Carhart’s long track record of stellar returns or on the disappointing losses realized by his team’s computer-driven strategies in 2007. Global Alpha, once Goldman’s flagship fund, is now a fraction of its peak size following a wave of redemptions. But its performance has rebounded this year.

The fund has gained 25 percent since January, said Carhart, who still has money tied up in the fund.

Carhart left Goldman Sachs in early 2008 and has a non-compete clause that is still in effect until next April.

Since leaving Goldman, Carhart has enjoyed a rare breather in his career and has packed his family into an Airstream recreational vehicle to tour the United States.

Next year, he will begin in earnest to work on setting up his new business by searching for lawyers, prime brokers and new employees to join him.

Back in Manhattan, Carhart said he has started to attend investor conferences again. “I’m also taking a lot of calls from people who are interested,” he said.

Reporting by Joseph A. Giannone and Svea Herbst, editing by Gerald E. McCormick