04/04/2012

Investors Line Up Behind Capstone Spinoff

Marjorie Hoganís Altum Capital has attracted strong investor interest since spinning off from Capstone Investment on Jan. 31.

The New York firm, which had $176 million of assets at the time of its separation from Capstone, entered April with $225 million. The word is that it could have taken in even more, but is limiting monthly inflows to keep a lid on its cash balance. That reflects Hoganís deliberate approach to investing in collateralized loan obligations and other structured-credit products. The capacity of the Altum Credit Fund currently is about $500 million ó a mark it could hit by the end of next year.

Hoganís team has racked up impressive returns since Capstone backed its launch in July 2009 with $60 million. The fund gained 18.3% in 2009, 36.2% in 2010 and 11.1% last year. It was up 4.6% through February.

Before spinning off from Capstone, Hogan returned the $60 million of seed capital plus $40 million of profits. Other backers, including Vanderbilt Universityís endowment, have stuck with the fund.

Altum employs quantitative models to invest in both the rated and unrated portions of CLOs, as well as non-agency mortgage-backed securities. The firm is developing new programs that would allow it to target other types of structured products.

Hoganís team mainly invests in the U.S., but has been paying increasing attention to the European market. Altum plans to hire 2-3 staffers for a research office in London it expects to open in the next couple of months. European paper currently accounts for about 20% of the fundís assets, but the figure is expected to rise.

Hogan brought her entire seven-person team with her from Capstone to Altum, including senior trader Lynn Paquette and marketing chief Miriam Freier. On March 26, Altum hired quantitative modeler Zhao Cheng from Barclays, where he analyzed mortgage-backed securities.

Altum is among a handful of hedge fund firms owned and run by women. Itís likely the firm will seek mandates from pension systems and other institutional investors that have specific allocations for minority- and women-owned asset managers.

Before joining Capstone in 2009, Hogan was a senior managing director at Bear Stearns, where she traded several hundred million dollars of proprietary capital. She helped start Bearís mortgage-derivatives trading business in 1991.

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