GSA eyes $1 bln limit for Alpha Capture hedge fund

Date: Friday, July 25, 2008
Author: Laurence Fletcher, Reuters

Hedge fund firm GSA Capital plans to raise a further $200-$300 million for its new Alpha Capture fund, which aims to use top stock ideas from investment banks for its trades, the company told Reuters. Alpha Capture, which was launched as a hedge fund on July 1, has $700 million in assets due in part to investments by two GSA multi-strategy funds. It will open for external investment on Oct 1 and is likely to be closed at $1 billion, it said recently.

Alpha Capture is a market neutral portfolio that aims to take the best stock ideas from investment banks by analysing their track record of recommendations.

It has similarities with MW TOPS (TOPS.AS: Quote, Profile, Research, Stock Buzz), which floated at the end of 2006. TOPS stands for Trade Optimised Portfolio System and is a process driven by technology that evaluates and tries to capture the best available ideas from brokers. "A few years ago there was a debate as to whether research departments have a value. It's now coming full circle and people are realising that sales desks are very, very good at generating money-making ideas," GSA partner Dan Squires said.

"On a five-year view I think you'll see a massive amount of this. There is maybe room for five-to-six meaningful players." Alpha Capture, which processes thousands of stock recommendations per day, has been running as a strategy since last October, when it was launched after a tough July and August for some quant funds. (Editing by Sue Thomas)