Little Harbor Advisors, an asset manager managing $250 million, is reprising a short-seller-only strategy that soared during the financial crisis.
The Massachusetts-based firm, which runs private strategies like hedge funds and alternative-flavored ETFs, believes there’s a market correction coming, and the fund is a chance for institutional investors to “successfully invest on the short-side of the market,” a fund document states.
“We felt it was an opportune time to bring back the concept,” said Jeff Landle, the chief investment officer of the firm, which grew out of a family office for wealthy founders of other asset managers.
“This is a way for investors to get a hedge on their downside with experts,” said Landle, a former executive at European asset managers HVB Alternatives and Hardt Group, as well as Connecticut-based Commonfund.
In 2007, Little Harbor introduced this strategy for the first time in the hopes of taking advantage of a market downturn.
The bet proved prescient as the global financial crisis tanked markets, and the strategy, which started with just $6 million, swelled to more than $100 million before it was shuttered in 2011 after making “outsized returns” during the market downturn, according to Landle. Landle declined to share performance figures due to SEC marketing rules.
Little Harbor Advisors
The new strategy will invest four external short-selling funds — Orso Partners, Kingsford Capital, Contrarian Alpha Management, and Teixeira Partners — as well as three internal portfolio managers who trade for Little Harbor.
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Orso Partners, run by Scott Matagrano and Nate Koppikar, Contrarian Alpha from Parker Quillen, and Mike Wilkins’ Kingsford Capital will each receive a quarter of the fund’s assets, a fact sheet for the fund states. Landle said the firm expects to raise north of $100 million for the strategy, and that the manager has spoken with sovereign wealth funds, endowments, and large foundations about the offering.
Minimum investments are $5 million, the fact sheet notes, and for institutions looking for a separately managed account, there is a $25 million minimum.
Similar to the first iteration, Landle expects the strategy to have a “finite life” that takes advantage of a market correction.
“All of what we do is centered around minimizing downside risk,” he said of Little Harbor, but this strategy allows investors to “potentially magnify” returns.
