Tech hedge fund targets institutional money

Date: Thursday, July 24, 2008
Author: Dane Hamilton, Reuters

The former chief technology strategist for JPMorgan Chase (JPM.N: Quote, Profile, Research, Stock Buzz) and a partner are reaching out for institutional investors after generating solid returns over two years at their family-and-friends-financed hedge fund.

Christie Street Capital, a firm named for the Edison, New Jersey, street where Thomas Edison made globe-changing inventions, is looking to raise several hundred million dollars or more for the technology-focused fund, people familiar with the firm said this week.

Christie Street was founded by Greg Geiling, former top-ranked Institutional Investor telecoms equipment analyst at JPMorgan who was promoted to chief tech strategist in 2001. His partner, Andrew Berliner, is a former managing director at hedge funds Ark Asset Management and NorthStar Capital Funds.

The firm, which currently has less than $50 million (25 million pounds), has generated returns of nearly 21 percent since inception in August 2006, according to an investor note obtained by Reuters.

The firm is looking for institutional money at a time when tech investing is somewhat out of favour compared with last year. The Morgan Stanley Technology Index .MSH, which includes many major tech stocks, has fallen over 20 percent from a peak last fall.

Still, one analyst said the firm could attract investor interest for fund of funds and others looking to allocate capital to the technology sector.

"Tech is not really in favour right now, but if Christie Street has a verifiable track record and can convince prospective investors that it will deliver alpha (above market returns), it should be able to attract interest," said Dan Farkas, hedge fund analyst at Morningstar Inc (MORN.O: Quote, Profile, Research, Stock Buzz). "Investors like alpha in just about any form."

Christie Street executives declined to comment.

According to marketing materials, the firm plans to generate net returns of 12 percent to 15 percent per year through a portfolio of 40 to 60 long and short positions in the technology sector.

It said it is particularly focused on "disruptive" technologies that could cause significant market shifts prior to investment by retail investors.

It didn't name any particular stocks it plans to buy, but said it would short the companies whose technology could be thwarted by new innovations and go long on those offering promising new technologies.

"Christie Street believes that there are a number of emerging innovations within the TMT (technology, media and telecom) sectors that will result in significant market dislocations over the coming years," it said in the marketing materials obtained by Reuters.

Some technology sectors include digital advertising, wireless applications, Internet video, broadband and others, it said.

The fund generated returns of 5.92 percent in the first half of 2008, well above a similar benchmark, the Hedge Fund Research Technology/Healthcare index, which lost 3.35 percent for the period. In 2007, it posted returns of 10.29 percent, according to an investor note.

The firm uses Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) as its prime broker.