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June 20, 2018  

Bass-Backed Blueport in Marketing Mode

Peter Blaustein and Arnau Porto, who since 2015 have been running money exclusively for billionaire Robert Bass, are seeking outside investors.

Working through their Blueport Capital of Menlo Park, Calif., Blaustein and Porto plan to launch a commingled fund early next year with initial capital of perhaps $500 million — including the $300 million they already run for Bass.

A source said raising money from outsiders always has been part of the plan for Blueport. The timing of the launch reflects the fact that Blaustein and Porto soon will have a three-year track record to show investors — a minimum requirement for most institutional allocators.

Blueport earned returns of about 20% each in 2016 and 2017, and is up a little more than 10% so far this year, a source said. That compares to gains for the S&P 500 Index of 12% in 2016, 21.8% in 2017 and 2% year-to-date.

The money Blueport runs for Bass currently resides in a separate account. The total includes $100 million of seed money and a second infusion of $100 million, plus investment gains.

Blueport keeps about 75% of its capital in liquid U.S. stocks, with the other 25% in a mix of products that are less liquid or outside the States — for an overall equity position of 90%. While that profile apparently encompasses opportunistic plays across the capital structure, one prospective limited partner said Blaustein and Porto don’t foresee a situation in which they would move heavily into credit instruments. In a recession, for example, they would aim to upgrade the quality of their equity holdings while reducing net exposure.

The prospective investor described the firm as employing a deep research-driven strategy with a typical horizon of five years.

Blaustein and Porto apparently are considering two share classes. One would have a three-year lockup period. The other would allow investors to withdraw capital twice yearly from the start, but only in amounts equal to 25% of what they had in the fund.

Bass, an heir to an oil fortune, has a net worth of some $5 billion. He currently is chairman of jet maker Aerion Corp., and has led investments in consumer businesses including American Skiing, Container Store, Dave & Buster’s and Duane Reade.

Blaustein worked from 2012 to 2015 at Oak Hill Advisors, Bass’ New York family office. Porto worked as a stock analyst at Viking Global from 2011 to 2015, and before that was at Blackstone.