10/21/2009

Ex-Parkcentral Pros Prep Fixed-Income Fund

The investment team that managed Ross Perot's failed hedge fund, Parkcentral Global, is gearing up to launch a fund of its own.

Peter Karmin, who was the top portfolio manager at fund operator Parkcentral Capital, left in June to form Highland Park Office Partners of Highland Park, Ill., with six other Parkcentral alumni. Karmin quit Parkcentral at the urging of investors eager to back a new fund managed by his team.

Highland Park plans to launch a fixed-income hedge fund in 2010, but already is managing more than $1 billion of long-only credit investments for institutions and family offices via managed accounts.

Parkcentral was set up primarily to run money for Perot and his family. The firm was based in Dallas, but mostly the investment staff worked in Highland Park, Ill.

Parkcentral decided to liquidate its hedge fund last November after it had fallen 40% for the year. At the beginning of 2008, Parkcentral Global had about $2.5 billion under management, but by yearend the fund was down to about $1.5 billion. By some accounts, including the allegations in an investor lawsuit, the value of the assets continued to fall until they were worth less than the fund's liabilities.

Despite Parkcentral's meltdown, Highland Park is drawing interest from investors who see an array of opportunities across the fixed-income spectrum, even in low-risk asset classes. At the same time, some banks have indicated they are again willing to extend credit to leverage up such investments.

Karmin is chief investment officer of the new firm. The six other Parkcentral alumni who formed Highland Park are Ted Chang, chief technology officer; Bill Ake, head of investor relations; Walter Clark, back-office chief; and investment staffers Felix Cua, Carl Hopman and Meng-Li Gu. All are working out of Parkcentral's old offices in Highland Park except Gu, who is in Dallas

The planned hedge fund would seek absolute returns via a highly diversified portfolio of credit investments. The fund would target fixed-income opportunities throughout the market, investing wherever assets are trading significantly below their intrinsic value.

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