New York-based Pulteney Street Capital was established in 2013 by Sean McCooey. Launched in May of 2013, the PSP Multi-Manager Fund (`PSP') is a multi-manager, multi-strategy liquid alternative fund. By using an SMA structure, Pulteney Street is able to monitor portfolios in real time, allowing it to tactically re-allocate capital among managers. Typical investment strategies include: long/short equity, event-driven and liquid credit.
With respect to identifying new managers, emphasis is placed on combining both emerging and established fund managers into the PSP fund. Of the 800 managers that pass the initial screening stage, Pulteney's team then evaluates and performs due diligence on 150 to 250 managers using a proprietary scoring methodology. The earlier a firm is in its lifecycle, the better.
Key factors that are taken into consideration at this stage include:
• Smaller AUM when the managers are most nimble
• Can sustain outperformance
• Not living off the management fee
• Minimal conflicts of trying to run a business
• Large firm pedigree principal(s) is preferred
• Assess manager investment strategy and performance
• On-site evaluation of investment process and merits
• Fully "vet" the investment equation.
"Our investment philosophy is to deliver long-term net returns in excess of the broad market equity indices and to provide access to high quality asset managers not otherwise available to the investing community," explains Pulteney's Managing Director, Daniel McCooey.
That Pulteney focuses on the emerging manager space is a key point of differentiation compared to other multi-strategy funds in the market. "We sit inside a mini prime where we have access to emerging managers on a daily basis. We believe that we are seeing managers that are not on everyone's radar," adds McCooey.
Once the initial screening stage has been completed, Pulteney allocates to between 10 and 15 best-of-breed managers in the fund at any given time. Each manager is then closely monitored, with P&L and risk management reports generated at both the manager level and aggregate portfolio level. Capital is than re-allocated on an intra-month basis based on qualitative and quantitative factors.
Pulteney's team of analysts each has 12 years of experience in sourcing and evaluating portfolios of hedge funds. Presently, five managers make up the PSP fund, whose strategies include: long/short dollar neutral, event driven, a volatility strategy, and a long/short consumer strategy.
"We outsource our risk to ConceptOne and receive daily reports on our portfolio. We believe our investors are more comfortable knowing that a third party is monitoring our portfolio on a daily basis," confirms McCooey.
In what has been a highly volatile year, multi-strategy funds have enjoyed mixed results. On average, they have returned -2.28 per cent (through August) according to the HFRI Multi-Strategy Index. By comparison, the PSP fund is down -1.9 per cent YTD.
"In the most volatile times that we have just experienced, our dollar neutral manager has outperformed our other managers and the broader market," confirms McCooey, who, on winning this year's award for Best Multi-Strategy Fund Manager, comments:
"It is a privilege to be recognised by our peers and service providers in the hedge fund industry.