05/06/2009

Goldman Cap-Intro Event Draws Big Names


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CORRECTION: A May 6 article, “Goldman Cap-Intro Event Draws Big Names,” incorrectly reported that a capital-introduction conference being hosted by Goldman Sachs tomorrow in New York was originally to be held in March at the Fairmont Turnberry Isle Resort in Miami. The Miami conference, which Goldman plans to hold at a later date, will focus on emerging hedge fund managers. This week's conference in New York features established managers.

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Goldman Sachs has lured some of the most prominent hedge fund managers to a capital-introduction event scheduled for next week, flexing its muscle at a time when many prime brokers are still struggling to find their footing.

The bank's senior management has been working the phones to get big-name fund managers to attend, and the efforts have paid off. The biggest coup: Steve Cohen, head of SAC Capital, is slated to attend. Cohen, whose Stamford, Conn., firm manages around $12 billion, rarely attends cap-intro events.

Other marquee names who have RSVP'd for the May 14 event in New York include AQR Capital's Cliff Asness, Galleon Group's Raj Rajaratnam, GLG Partners' Pierre LaGrange, Maverick Capital's Lee Ainslie, Millennium Partners' Israel "Izzy" Englander, Och-Ziff Capital's Dan Och, Pershing Square's William Ackman, Third Point Capital's Dan Loeb and Touradji Capital's Paul Touradji.

In past years, Goldman has held the conference at the posh Fairmont Turnberry Isle Resort in Miami. This year's conference originally was scheduled to be held there in March, but Goldman called off the three-day event in February. At the time, the bank told clients it was concerned about drawing unwanted scrutiny of its spending.

Goldman chose Chelsea Piers in Manhattan as the venue for the rescheduled event, which has been cut to one day. Most of the day is reserved for one-on-one conversations between managers and investors.

Cap intro went into hiding after the financial markets collapsed last September, as investors quickly lost their appetite for hedge funds. One prime broker after another canceled or significantly scaled back scheduled events. Now there are signs that the cap-intro market has begun to thaw. Several prime brokers, including Credit Suisse and Morgan Stanley, have reported larger-than-expected turnouts at recent events.

With next week's conference, Goldman is hoping to show it still stands near the top of the prime-brokerage pyramid. For years, Goldman, Morgan Stanley and Bear Stearns were the clear leaders among prime brokers. But then the financial crisis turned Wall Street upside down. A recent report by financial services company Sanford C. Bernstein said it expects the market share of the "big three" prime brokers to decline from the 60% range to about 40%. J.P. Morgan, which absorbed the faltering Bear Stearns in March 2008, will take the lead with about 20% of the market, followed by Goldman and UBS, according to the report. Hedge funds have been diversifying their prime-brokerage relationships in order to reduce counter-party risk.

Goldman recently made some changes to the leadership of its capital-intro team. Tom Lynch, longtime co-head of cap intro in the U.S., moved to a sales role, leaving David Solomon in charge. Goldman's prime-brokerage operation is led by John Willian and James Paradise.

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