Ex-GLG, Lionhart Managers Plan Commodities Equity Hedge Fund

Date: Tuesday, April 13, 2010
Author: Bloomberg

Jason Wang, a former manager at GLG Partners Inc., and Simon Quirke, who helped manage Lionhart Advisors Group Ltd.’s Asian investments, are starting an equity hedge fund that will focus on commodities-related industries.

Iridium Asset Management will start the Asian equity long- short fund on May 3, said Wang, chief executive officer of the Singapore-based firm. The Iridium Alpha Fund has attracted mostly money from Asian ultra-high-net-worth individuals, and is set to grow to $100 million within a year of its launch with a capacity to manage $1 billion, Wang said.

Iridium is seeking to exploit “inefficiencies” in the equity of Asian commodities companies, Wang said. It joins Singapore-based Aisling Analytics Pte, manager of the $1.6 billion Merchant Commodity Fund, which said in February it planned to start an equity long-short fund investing in commodities and natural resource companies.

“In commodities, fundamentals are there for all to see,” Wang, 31, said in an interview yesterday. “There are a greater number of inefficiencies with Asian commodity-linked equities than the European or U.S. counterparts. They’re less widely covered, understood by the buy-side and sell-side.”

The managers would be “happy” with returns of at least 15 percent a year for Iridium Alpha, Wang said. Long-short funds bet on rising and falling stocks.

OCBC, Lionhart

Wang was previously a senior proprietary trader focusing on global equities at Singapore-based Oversea-Chinese Banking Corp. He was formerly part of the investment team in London managing New York-based GLG’s $2 billion European long-short fund, and specialized in resources and industrials.

Quirke, who has 20 years of equities trading experience, managed a long-short portfolio for Lionhart’s global multistrategy fund.

The returns on the portfolios that Wang and Quirke, 43, previously helped manage were in the “top quartile of the global hedge fund industry, risk adjusted,” Wang said, declining to be more specific.

“We’re not going to run huge risk,” he said. “We don’t expect to see ourselves down more than 10 percent in any given year; that’s historically been true of our performance.”

Iridium’s fund will trade equity and commodity derivatives and start with 30 to 50 securities, Wang said.

“We can express 95 percent of our views through equities so there won’t be heavy reliance on commodity derivatives,” he said.

Liquidity

The fund will focus on maintaining a “high level of liquidity” and transparency, with 95 percent of the portfolio being marked to market, Wang said. It will also use “very low leverage,” he said.

Hedge funds, which often use borrowed money to amplify returns, suffered from frozen credit markets after Lehman Brothers Holdings Inc.’s bankruptcy in September 2008.

“We’ve moved to an age where hedge funds should not be dependent on excessive leverage,” Wang said.

The manager will charge the standard 2 percent management fee and 20 percent performance fee, Wang said. UBS AG and Deutsche Bank AG are its prime brokers.

Iridium, an element used primarily to harden platinum, is one of the most anti-corrosive metals. The name of the fund will reflect its “resilience to market vagaries,” Wang said.