02/23/2011

Hayground Cove Founder Jumpstarts Vehicle

Jason Ader is back at the helm of his hedge fund.

Ader, a former Bear Stearns consumer-stock analyst, founded New York-based Hayground Cove Asset Management in 2003 with seed capital from Bear. But in late 2007, he turned over the reins of his Hayground Cove Institutional Partners fund to two deputies so he could focus his attention on a few large activist bets, including an investment in the Las Vegas Sands casino.

The long/short equity fund soon suffered from a combination of redemptions and investment losses. In 2009, Ader “reallocated” a portion of the fund's remaining capital to a private equity-like vehicle, Doha Partners, that invested in a Nevada bank and companies in India.

As a result, the Hayground Cove hedge fund saw assets under management fall from a peak of about $500 million just before Ader's departure to about $50 million today. Doha Partners, meanwhile, has grown to about $450 million of assets.

Word has it that Ader was unhappy with the hedge fund's performance under his deputies — portfolio manager Mark Soloway and head trader Evan Wax. Both departed at the end of 2010.

Under Ader's stewardship once again, the fund has gained 12% in less than two months. How? Mainly by exiting unprofitable positions and focusing on what Ader knows best: companies in the gambling, lodging and leisure sectors. Before Ader stepped down as portfolio manager, the fund had produced an average annual gain of about 12%.

Following Ader's departure, the fund lost 25% in 2008 — along with a big chunk of capital due to the collapse of its chief sponsor, Bear. The fund gained more than 30% in 2009, but with Ader still out of the picture, redemptions continued to mount. The fund lost 10% last year.

During his hiatus, Ader lived in San Francisco, where he concentrated on the restructuring of Las Vegas Sands, Western Liberty Bancorp and other companies he invested in.

With Ader back in New York to manage the hedge fund, Hayground Cove's marketing director, Michael Tew, kicked off a new capital-raising initiative last month. He already has traveled to Europe and soon plans to meet with prospective investors in New York. The firm also is relying on its prime broker, Goldman Sachs, for capital-introduction services.

Soloway and Wax, meanwhile, are looking for work. Soloway, who had been with Ader from the start, previously worked as an equity analyst at Bear and Smith Barney. Prior to joining Hayground Cove, Wax was a financial-stock analyst at Goldman.

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