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It's a familiar story on Wall Street. Talented money managers split off from a blue-chip trading shop, hoping to achieve fame and fortune as managers of their own hedge fund.

In the case of

Tahoma Capital

, the story has a twist. The team, led by Jeffrey Scott, never worked for Goldman Sachs or Julian Robertson. Scott's crew cut its teeth investing tens of billions of dollars for a different corporate icon:


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Scott, Tahoma's founder, was assistant treasurer at Microsoft for 10 years, leading the software company's portfolio team for the past five. Besides him, Tahoma's ranks include one former managing director in the Microsoft portfolio unit and four other senior directors and directors, according to market materials obtained by


Corporate treasury departments are not fertile breeding grounds for hedge fund talent. Usually, they employ conservative strategies to invest a company's excess capital, with their main goal being preservation of money that may eventually be needed to fund operations.

At Microsoft, whose high-margin software products have thrown off enormous sums of cash for years, the situation is different. Tahoma says that over five years at the company, its team oversaw an average of $56 billion in assets that produced as much as one-fifth of Microsoft's earnings.

"The portfolio we managed at Microsoft was structured to produce low volatility and minimal negative surprises," the brochure reads. "Our investment policy was driven by a comprehensive risk control framework, with a disciplined compliance process including modeling, pricing and accounting analysis."

Whether those tactics can be adapted to a hedge-fund reality is an open question. Still, Sam Saunders, a stock analyst at Fulcrum Global Partners, believes managing Microsoft's money is pretty good practice.

"Due to the large size of Microsoft's balance sheet, they diversified their investment holdings into sexier areas such as derivatives hedges," says Saunders. "That experience as a corporate comptroller will be pretty unique in allowing him to transition into a hedge fund role."

Tahoma's literature claims that between July 2000 and July 2005, Scott's team produced an average annual return of 7.07% at Microsoft, making it the third-largest profit generator at the company. A Microsoft representative didn't immediately respond to an email seeking confirmation of the performance.

Scott isn't a media star. His name wasn't familiar to several analysts who follow the stock. "They never gave us a lot of information" on the portfolio's managers, said one. And only limited information is available about the makeup of the Microsoft portfolio. According to slides presented by the company to analysts in 2003, the $53.4 billion Treasury portfolio allocated 70% to fixed-income, 20% to cash and 10% to equity.

"Recreating the diversification in asset classes, strategies and trades used at Microsoft will be a hallmark of Tahoma Capital," the brochure says. Tahoma plans to take short and long positions in a diversified pool of assets including stocks, bonds, currencies, credit options, municipals and commodities.

Tahoma says it can generate high returns without taking on undue risk. No more than one-third of a fund's available risk will be deployed to a single asset class, portfolio manager or risk factor, states the brochure.

Still, some on the Street wonder if a treasurer -- even Microsoft's -- will be able to develop the cutthroat mindset needed in hedge fund investing. "Microsoft generated a lot of its earnings by selling puts in conjunction of its buyback program," said one potential investor studying the fund. "It is not clear whether

this manager can make money just by selling puts or by actually trading."

Scott, reached by phone, says he wasn't involved in any "put program" at Microsoft. "It is something I was not responsible for," he says. Scott says his role was to manage money across all asset classes, a background that should prepare him well for his new job.

"I have managed more money than most hedge funds managers," Scott says.