Five Star Funds, an asset management and advisory firm, has launched the Flamingo All Weather Fund, the first hedge fund of its kind to be based in Las Vegas, Nevada.
The area has enjoyed sustained periods of significant economic growth, transforming the city from a boom-and-bust town dependent on discretionary spending at casinos to a business-friendly metropolis fostering growth in diversifying sectors.
“The floodgates really opened when the recent tax changes went through,” Derek Davis, Partner at Five Star Funds, says. “Since the limiting of the SALT deduction, we’ve seen an unprecedented amount of wealth flee California and settle here in Las Vegas. The quality of life per dollar out here is truly unbeatable.”
Despite the surge in wealth to the area, there are still relatively few options in choosing a hedge fund manager with a local presence.
“We’d like to think of the Flamingo All Weather Fund as the first institutional-quality investment strategy and management team to be based in the area,” says Davis.
The fund is multi-strategy and built with the “late innings” of the economic cycle in mind, targeting high, stable returns through all market gyrations. Artificial intelligence is combined with fundamental analysis to optimise allocations and trading strategies, while minimising correlation to traditional market risk.
In operation, the Fund aims to avoid crowded trades and passive market exposure, making opportunistic trades in conjunction with risk-mitigation strategies. The melding of strategies like fixed income arbitrage and computer analysis creates a unique offering.
While the hedge fund is new and without history, the principal underlying strategies employed have at least ten years of verified client outperformance relative to their benchmarks.
“Each of these strategies are already highly successful on an independent basis. However, their amalgamation leads to a portfolio that is greater than the sum of its parts,” say Joe Hegener (pictured), Portfolio Manager to the Flamingo All Weather Fund. “Having the realised client performance data through time allows us to conduct more thorough scenario analyses and stress-tests. While many other new funds must rely solely on hypotheticals, we have the ability to point to strategies and return profiles that are tried and true.”
The Flamingo All Weather Fund is the only fund vehicle where the combination of these high-performing strategies can be utilised by US investors.
The Fund is targeting USD400 million in assets under management via GP/LP structure with accredited investors, RIAs, and institutions. An offshore structure in the Cayman Islands allows efficiency for non-U.S. and tax-exempt or IRA investors.