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July 18, 2018  

Liquidations Drive Advisor's Growth

A year after setting up shop, hedge fund operations consultant Cherry Valley Solutions is seeing strong demand from managers in liquidation mode.

In the past six months, the New York firm has been hired by four fund-management companies to assist them in the wind-down process. Cherry Valley’s services include helping general partners liquidate fund assets, return investor capital, terminate vendor contracts and prepare final audits and regulatory filings. It also helps employees find new jobs.

The process often takes longer than managers expect, with some engagements lasting up to 24 months, said Penn Miller-Jones, head of business development at Cherry Valley.

“The chief technology officers, chief operating officers and controllers are there to help, but at the end of the day they want to move on and find a new role. That leaves the portfolio manager/general partner in a tough situation,” he said. “Business has been brisk in the wind-down space.”

Cherry Valley’s experience belies a decline in the number of fund liquidations industrywide. According to HFR, 145 hedge funds liquidated in the first quarter, down from 215 during the same period last year — and near the lowest level since the 2008 market crash.

But there’s still plenty of business to go around, with HFR counting 650 liquidations during the 12 months ended March 31. Cherry Valley, led by former Clovis Capital chief operating officer Jeffrey Podell, is among a handful of operations consultants that handle wind-downs.

Miller-Jones wouldn’t identify Cherry Valley’s clients, but recent liquidations include Chapter IV Investors of Charlotte, Hutchin Hill Capital of New York, Ivory Capital of Los Angeles, Marble Arch Capital of New York and Pennant Capital of Summit, N.J. Structured Portfolio Management of Stamford, Conn., also appears to be in wind-down mode.

Cherry Valley’s core business is assisting fund managers with a range of non-investment functions including accounting and auditing, data management, marketing, regulatory and tax filings, risk management and technology. The firm employs eight people altogether, including chief operating officer Helen Koutsogiannis.

Before starting the business, Podell spent 15 years at Clovis, a New York fund shop that shut down last year. He also has worked at Goldman Sachs.

Miller-Jones previously worked in the prime-brokerage units of Cowen and Jefferies.