company does 900 million sales.
company has large presence
in brazil,austrialia,canda.hake 70% percent of sales.
only 10 million shares outstanding.
45 million in cash 4,50 cash.
ebitda is 80 million a year.
In quite an interesting development, James Pallotta's hedge fund Raptor Capital Management will shut down for the time being. Readers will be familiar with Raptor because we had just started tracking them in our hedge fund portfolio series. Unfortunately, their spot on our list will be vacated for the time being until they decide to return. Pallotta sent out a letter to investors where he suspended redemptions and said they will be winding down the funds as they return capital to investors starting in July. Pallotta said, "I intend to step back from day-to-day investing for a few months to spend valuable time crafting an optimal investment strategy in order to capitalize fully on the next several years' developing investment opportunity set."
So, while Pallotta may be closing shop for now, it does sound like he has intentions to return fresh and with a solid game plan. He continued, "Consistently, in recent years, I have conveyed my skepticism regarding the sustainability of certain aspects of the industry's structure and short term focus. (There is) a place for a model which aligns the interests of investors and managers toward the goal of truly-shared compounding of superior risk-adjusted returns over time." It sounds as if in addition to crafting a new investment strategy, that Pallotta is crafting a new fund structure as well. He wants investors to keep money in place for multiple years, a setup used in many private equity funds.
He must feel that this would allow him to make long-term investment decisions, rather than worrying about near-term performance. Additionally, he wouldn't have to worry as much about redemption requests, a fear that was realized in the hectic year of 2008 as investors demanded their money back. This will be interesting to monitor whenever he decides to return.
Additionally, we found it interesting to note that Pallotta will apparently provide seed capital to a few analysts who will be starting their own hedge funds, in a move similar to that of hedge fund legend Julian Robertson (who did so with the Tiger Cubs).
Raptor's funds were pretty much flat for the year through May in terms of performance, according to the letter. Our only look at Raptor's performance was included in our March hedge fund numbers, where we saw Raptor -1.34% for the year at that time. We began tracking Raptor because it was being spun-off from Paul Tudor Jones global macro fund Tudor Investment Corp. Pallotta was responsible for all of the solid performance in their equities fund (called Raptor there as well). Pallotta spun off the fund and we followed him due to his solid track record of returning 13.85% a year from 1993 until 2008 while at Tudor. Raptor managed $9 billion in its peak at Tudor and currently manages around $800 million. You can view some of Raptor's portfolio here.
Raptor joins the growing list of prominent hedge funds to shut down amid the crazy markets of 2008 and 2009. Just last week we detailed the closure of Art Samburg's hedge fund Pequot Capital. Overall, 2008 was definitely a bleak year in hedge fund land. A few other notable closures we've covered on the blog include Satellite Asset Management and Okumus Capital. (See the list of other 2008 closures here).
Here is James Pallotta's letter to Raptor investors (RSS & Email readers will need to come to the blog to view it):
I have been trusted by clients to steward their capital for more than 22 years. It has been an
immensely rewarding tenure. During this time, I have had a “front row seat” from which to witness the
growth and maturation of the hedge fund industry. We at Raptor take pride in having navigated many
different environments to best serve clients. In doing so, we have returned an average net annualized
13.85% – inclusive of our roughly flat performance for 2009 – to Raptor Global investors since inception
on October 1, 1993 through May 31, 2009 as compared with the S&P 500's return of 6.53% in the same
I have been incredibly fortunate to work with many talented investment professionals over the
last three decades. Beginning with Essex Investment in 1983, I was privileged to be mentored by
seasoned portfolio managers – including Joe McNay and Mike Hazard – and began managing long/short
funds in early 1987. In 1993, I began my tenure at another world-class organization, Tudor Investment
Corporation. For 16 years, I had the honor to work alongside partners and friends like Paul Tudor Jones,
Mark Dalton, Andrew Paul, and Michael Stansky – a very small sample of the terrific people at Raptor
Given the vantage point afforded me by this extensive experience, I have developed strong
feelings about the industry’s strengths and weaknesses. Consistently, in recent years, I have conveyed my
skepticism regarding the sustainability of certain aspects of the industry’s structure and short term focus.
I believe that there is a place for a model which aligns the interests of investors and managers toward the
goal of truly-shared compounding of superior risk-adjusted returns over time.
The decision to wind down the Funds and to begin returning capital in early July should be seen
in context. I am no less passionate about investing and trading today than I was 22 years ago. In fact,
quite the contrary is true. Once the process of returning capital is smoothly underway, I intend to step
back from day-to-day investing for a few months to spend valuable time crafting an optimal investment
strategy in order to capitalize fully on the next several years’ developing investment opportunity set. To
this end, my management company will remain operational.
In order to ensure that all Raptor Global investors are treated equally, redemption requests have
been suspended. Investors who have submitted second quarter redemption requests will instead
participate in the overall return of capital. We anticipate that, in early July, investors will receive: (i) a
cash payment representing approximately 75% of your current Raptor Global investment and (ii) an in-
kind distribution of a pro rata interest in the Raptor Private Portfolio (“RPP”) representing approximately
15% of your current Raptor Global investment. The remainder of your investment will be distributed as
soon as is practicable thereafter. Rest assured that a core team of professionals will continue to support
me in the disposition and wind down of the Funds and the ongoing management of RPP.
On behalf of everyone at Raptor, I want to thank you again for your steadfast confidence, trust, and partnership. I will be forever appreciative and hope that, before too long, I will have the opportunity to partner with each of you again.