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August 03, 2016  

Seasoned Macro Pro Pitches Volatile Strategy

Alex Gurevich, a macro trader who made a name for himself at J.P. Morgan before the financial crisis, is raising capital for a hedge fund.

His San Francisco startup, HonTe Investments, is marketing a global-macro strategy that Gurevich used to generate a 30% net return during the first seven months of this year managing his own money. Investors willing to pony up at least $20 million can access the HonTe Advisors Macro Program via separate accounts. Others can invest via a commingled fund dubbed Oasis HonTe that is available through futures brokerage R.J. O’Brien & Associates.

Either way, HonTe is charging a 1% management fee and a 25% performance fee.

The firm began trading the commingled fund on July 1 with $12 million of proprietary capital. Meanwhile, it has been talking to institutional investors with the aim of landing 10-15 separate-account assignments over the next 18 months.

HonTe Advisors Macro Program targets short-term, high-volatility investments in commodity, currency, interest-rate and equity-index futures. The Oasis HonTe fund, which employs half the leverage of the separate accounts, is geared for investors with a lower risk profile. Oasis is the name of a series of commodity-futures vehicles R.J. O’Brien offers to its wealth-management clients.

HonTe is getting off the ground at a difficult time for macro managers, following several years of disappointing returns. After pouring money into global-macro funds in the wake of the financial crisis, investors have cooled on the strategy — withdrawing a net $7 billion in the first quarter of this year, according to Hedge Fund Research.

But HonTe is betting Gurevich’s resume will be a selling point. He worked at J.P. Morgan from 2002 to 2007 as a member of a proprietary-trading team that generated headline-grabbing profits wagering on macro trends. A 2003 article in The Wall Street Journal identified Gurevich as a leader of the team and a “star trader” who focused on currency investments.

Gurevich left the bank to launch a hedge fund called Cloudview Capital with partner Roberto Vidal. But their timing was bad. They began trading with about $300 million on Aug. 1, 2007, just as the credit market was about to implode. Soon after, Gurevich wound down the firm and has since focused on managing his own money.

He took the first steps toward building a new hedge fund operation last year when he registered HonTe as a commodity-trading advisor. At the same time, he hired Chris Lutton as chief executive. Lutton previously spent five years at Nomura, where he helped expand the bank’s foreign-exchange sales desk in New York.

HonTe, which takes its name from the Japanese term for the best strategic move in the game of Go, has $76 million under management on a notional basis.

Born in St. Petersburg, Russia, Gurevich immigrated to the U.S. when he was 20 and earned a Ph.D. in mathematics from the University of Chicago. Before J.P. Morgan, he was a proprietary trader at Deutsche Bank.