“While new business momentum from start-up funds remains strong for our firm, the noticeable difference in our growth over the past couple of years has been the increasing traction we’ve had with more seasoned portfolio managers. Because these managers had successfully managed money at established hedge funds before, they are launching their own firms with materially larger initial capital than we had seen in previous years,” observes Jack Seibald (pictured), managing member at Concept Capital Markets LLC, one of North America’s leading introducing brokers.
This activity is partly a result of the dislocation at larger fund complexes. Certain platforms and hedge fund firms have downsized or ceased operating, leading to an outflow of talented hedge fund professionals keen to establish their own management companies. This wave of ‘second generation’ managers is drawn to Concept Capital because of its differentiated prime brokerage offering that emphasises client support, aggregated portfolio and risk reporting solutions, and its ability to selectively provide turnkey office and IT solutions.
“These managers are looking for a comprehensive set of solutions that will help them to get in business quickly and soundly, and for partners who can offer the type of operational environment they’ve become accustomed to. The services that have particularly helped us to win this new business are portfolio and risk reporting, which we’ve done a lot of work on in the last few years and have become an essential part of our offering, as well as office and IT support, which benefited from our recent move into new office space in New York”, explains Seibald.
This year the firm has been busily onboarding new funds. Among those are a couple of value-focused long/short equity strategies, a few private equity-style strategies investing in public equities (constructive activism), a fixed income strategy, as well as a second fund from an existing client who specialises in the healthcare sector. The latter illustrates the benefit of establishing long-term relationships with new managers; as they grow their AuM significantly over two, three years, it’s one of the most rewarding aspects of the business.
“The common theme among all of these new accounts is that their size is materially larger than the typical new client won in recent years. It’s also gratifying that several came to Concept from other brokers,” confirms Seibald.
What is also encouraging to firms like Concept Capital is that more institutional investors are starting to allocate to smaller emerging managers, the very talent that Concept’s team supports.
For example, the USD153bn New York State Common Retirement Fund last August allocated USD170m to an advisor to go out and find emerging managers.
“That’s encouraging because emerging managers have certainly not to any large extent received allocations from state pension funds. We hope to benefit from that trend with the managers we work with,” says Seibald.
Seibald says: “We’re looking to hire several high quality operations people who work on account reconciliation and reporting, trade resolution issues, money transfer issues, etc, that’ll be beneficial to the firm’s clients.”
On winning this year’s Hedgeweek award, Seibald comments: “We’re thrilled to win the award as it validates what we’re seeing in our business, and we’re proud of our entire team who deserve it for their collective effort in servicing our clients..”