This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Hedge Fund Report: Picking a Winner

To participate in the hedge fund bonanza, you can manage a fund, run a fund of funds, or arrange financing for people you think can do it better.

That last approach -- providing seed capital to new managers without necessarily investing in their portfolio -- is the route SkyBridge Capital has chosen with a big-name partner, Michael Dell. The rewards in this semi-obscure line of work can be big, as seed-capital providers usually end up with a cut of a hedge fund's management fee.

SkyBridge Capital is a seeding firm created last year by Anthony Scaramucci, co-founder of Oscar Capital, a hedge fund acquired in 2001 by Neuberger Berman; and Andrew Klein, co-founder of Soleil Securities Group. The firm signed up its first two managers last week.

Dell participates in SkyBridge's business via his MSD Capital, which is to say, with his own money. With more than $10 billion under management, the eight-year-old MSD is not a rookie player in hedge fund investing. MSD is run by Glenn Fuhrman, former head of Goldman Sachs' (GS ) Special Investments Group, and by John Phelan, a former principal at Ed Lampert's ESL Partners. The wealth management shop has invested money with top-notch managers including ESL.

A classic example of a successful seeder is Julian Robertson, founder of Tiger Management, who discovered giant talents such as Maverick Capital's Lee Ainslee or Lone Pine Capital's Stephen Mandel, the so called "Tiger cubs" who used to work with him.

More modern types include FrontPoint Partners, said to be a potential acquisition target for Morgan Stanley (MS), and Paloma Partners, whose back-office operations have recently been acquired by JP Morgan (JPM). The fact that big investment banks eye these operations shows that they are a growing and significant part of the hedge fund landscape.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs