07/02/2014

Altimeter Alum Aims for Sky-High Returns

A co-founder of hedge fund operator Altimeter Capital is using another firm he started to launch an equity vehicle targeting high returns.

Dennis Hong, who left Altimeter about a year ago, plans to begin trading the fund next month via ShawSpring Partners, a Boston firm he set up in early 2012. The new vehicle, ShawSpring Partners Fund, will launch with a $30 million commitment from Boston-based Sparta Group, the family office of Internet-equipment entrepreneur Gururaj Deshpande. Sparta’s capital will be deployed over a matter of months. The initial capital will also include about $4 million that ShawSpring’s clients agreed to move from separate accounts the firm manages.

The firm is expecting to assemble a tight group of 20-25 limited partners who will contribute a combined $100 million to $150 million within 6-12 months. At that point, ShawSpring plans to stop accepting new investors.

ShawSpring’s goal is ambitious: producing annual returns of 25-30% after fees, which is in line with Hong’s previous mandate as a portfolio manager for the firm’s allocations in the lodging, casino, Internet, and car-rental sectors. ShawSpring’s fundamental investment strategy will be similar to Altimeter’s. Hong will invest in a broad swath of companies around the world — those in the consumer, technology and travel industries.

ShawSpring is looking to take opportunistic, long-term, value-oriented positions in a concentrated portfolio of stocks perceived to be trading at discounts. The fund will also short stocks it views as overvalued.

Hong co-founded Altimeter in late 2008 with Bradley Gerstner, who was previously a partner at Paul Reeder’s PAR Capital. The hedge fund operated by Boston-based Altimeter was running $400 million when Hong resigned in April 2013.

At that point, ShawSpring had been in operation for about a year. At yearend 2013, Hong’s firm was running $2.9 million in separate accounts on behalf of 30 investors.

Hong helped launch Altimeter in 2009 after working at Matrix Capital and at Yale University’s endowment, where he assembled a portfolio of hedge funds, venture capital funds and private equity vehicles.

Hong hired Paul Lashway as ShawSpring’s chief financial officer. Lashway previously worked for shipping-data firm CargoMetrics. The firm’s staff also includes Michael Lamoth, who joined last month from WindSail Capital.

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