Limiting Liability?
Rye Brook Money Manager Abandons His Stable Of Troubled Investment Funds
Titian advisors which manages about $3 billion on behalf of pension funds and wealthy individuals, has been shifting some of the money it invests with roughly two dozen hedge funds away from some larger funds into smaller ones, according to letters it has sent to investors.
One of the most noteworthy moves was its decision to pull its money from Steven A. Cohen's SAC Capital Advisors at a time when the $14 billion hedge fund is in the spotlight in an ongoing insider trading investigation.
The decision by Titan, a so-called hedge fund of funds, turned some heads on Wall Street because the firm's founder, George Fox, is a friend of Cohen's and his Port Chester area investment firm is one of SAC Capital's oldest outside investors.
Titan is in the process of redeeming money from Bill Ackman's $11 billion hedge fund firm Pershing Square Capital Management, and in 2011 pulled all of its money out of $34 billion Brevan Howard Asset Management, one of the world's largest funds, according to the investor letters sent out from the Port Chester, New York investment firm.
Titan recently allocated money to GS Gamma, a New York-based fund with less than $1 billion under management, and BHR Capital, also in New York, with roughly $1.5 billion in assets.
Titan, according to a person familiar with the firm, had between $75 million and $100 million invested with SAC Capital.
There have been rumors that federal investigators had been in and around Port Chester, over the last two years.
Officials with Titan, who declined to comment, have not yet sent investors a letter explaining their decision to redeem from SAC Capital. The decision to exit, which investors were notified of in late December, came a few weeks after Mathew Martoma was charged with insider trading while working for Cohen's firm. He has pleaded not guilty.
Altogether, seven current and former SAC employees have been charged or implicated in the insider trading probe into hedge funds and their sources of trading tips, and the firm itself - along with the 56-year-old Cohen - has been drawing renewed scrutiny. Cohen has not been charged with any wrongdoing.
Nor has Mr. Fox been charged with any wrong doing.
Officials with SAC Capital, Pershing Square and Brevan Howard declined to comment to Greenwich Roundup on Titan's move.
The redemption from SAC Capital comes as Titan's own performance has been modest at best. Last year, the firm's flagship fund of funds was up 6.97 percent through the end of November, said a person familiar with Titan. I
n 2011, the fund was largely unchanged.
Titan would not be the first money manager to lose an appetite for large multi-billion dollar hedge funds. The $242.7 billion California Public Employees Retirement System, one of the biggest pension funds in the world, has long had a taste for smaller, less well-known hedge funds.
However, many experts said they thought the insider trading scrutiny may still have played a role in Titan's SAC decision.
It sounds like they were being very proactive in pulling out of SAC, but there may have been other reasons at work too,
Federal authorities left little doubt they were moving significantly closer to Cohen when they arrested Martoma in November and charged him with using inside information to generate profits and avoid losses totaling $276 million in shares of two drug stocks, Elan Corp PLC and Wyeth, now owned by Pfizer.
Federal authorities said Cohen, as owner of SAC Capital, signed off on the trades, even though the billionaire manager wasn't charged with any wrongdoing.
Ever since SAC's name first arose in the insider trading probe several years ago, George Fox has been loyal to Cohen.
At the end of 2010, Titan quit Loch Capital Management, one of four firms raided by federal authorities in November of that year, but it stuck with SAC Capital even after the hedge fund acknowledged getting a subpoena for information.
For now, Titan's redemption from SAC Capital does not appear to be setting off a run for the exits by outside investors, who account for $6.3 billion of SAC's money (the rest is owned by Cohen and other insiders, such as employees).
ON A SIDE NOTE:
Some will remember that former New York Gov. Eliot Spitzer (AKA Client 9) used the name of his friend George Fox as an alias when he allegedly met with a prostitute in Washington.
George Fox, 52, who's asset management and advisory firm Titan Advisors, LLC, based in Rye Brook.
A New York public relations firm at the time released a statement on behalf of George Fox.
“The news that his name may have been used as an alias comes as a great surprise and disappointment,” the statement reads. “Mr. Fox only became aware of Mr. Spitzer’s alleged activity when informed of it Monday morning by the media.”
“Mr. Fox considers Governor Spitzer a close friend and is distressed by the news that has emerged.”
The statement affirms there is “absolutely no connection between George Fox and the Governor’s alleged activity beyond the unauthorized use of his name.”
