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February 07, 2018  

Seed-Capital Investor Starts Commingled Fund

A hedge fund-seeding vehicle run by Stable Asset Management has inked its first deal.

On Feb. 1, the London firm committed $50 million to Durant Partners, a New York startup led by former Water Street Capital analyst Justin Udelhofen. In exchange, Durant will give Stable a cut of its fee revenue — standard terms for a seeding deal.

Stable funded the investment, in part, via a private equity vehicle it began marketing last year with a fund-raising goal of $400 million, including co-investment capital. The fund held an initial equity close last month, taking in an undisclosed amount of money. Some limited partners also co-invested in Durant alongside the fund.

Durant, which started trading in the second half of 2017, had about $10 million under management prior to its deal with Stable. The firm manages a concentrated equity portfolio encompassing long and short positions in small and mid-size companies.

Udelhofen began setting up shop in 2016 following his departure from Water Street, where he spent about 10 years. Water Street, a Jacksonville fund manager, pursues a value-oriented equity strategy that has long been closed to new investors. The firm was running $4.1 billion at yearend 2016. Gilchrist Berg founded Water Street in 1987 with backing from Julian Robertson.

Prior to Durant, Stable had seeded six startups since 2006, investing on a deal-by-deal basis. Last year it sold its stake in Arctic Blue Capital to H20 Asset Management, a unit of Natixis.

Stable is led by co-founder Erik Serrano Berntsen. Chief investment officer Jerome Muller joined the firm in 2017, having previously held a top leadership role at London hedge fund research firm Aspheric Group.