Jim Pallotta's family office, Raptor Group, is investing in a new hedge fund, Trevally Capital, which aims to capitalise on distressed sectors within the US housing market by trading US residential mortgage-backed securities (RMBS), according to a report by Bloomberg.
The report cites an investor presentation seen by Bloomberg as revealing that Pallotta, who is known for his early investments in firms like Two Sigma Investments and Graham Capital Management, is now backing Trevally, which is set to launch early next year.
As a seed investor, Raptor Group will enjoy a revenue-sharing agreement and reduced fees through the founder share class, according to a source familiar with the deal.
Trevally, a minority-led firm, was co-founded by Chief Investment Officer Steve Palmer and Co-CEOs Matt Jozoff and Brett Nicholas. With $100m already raised, including contributions from investment bank Seaport Global Securities, Trevally has secured commitments for an additional $150m.
Trevally’s strategy targets consistent double-digit returns by exploiting strain points in the housing market, such as rising mortgage rates, insurance costs, and the financial toll of extreme weather on homeowners. The firm will primarily invest in mortgage-backed securities tied to Ginnie Mae, which supports mortgages for low- and moderate-income borrowers.
Founders' share-class investors will pay a 1% management fee and 10% of profits, while later investors will see fees of 1.5% and 17.5%. Investments will have a one-year lockup period.
Before founding Raptor, Pallotta managed a $10 billion portfolio at Tudor Investment and oversaw private equity and hedge fund investments.
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