Had this on the watch list too long and could kick my own ass if it was possible. I think this is just the type of play needed on these markets along with Value shares such as Churchill China that I recommended yesterday.

Heres just a brief background on the company.................

Hedge fund leads rush to float
by Louise Armitstead
RAB Capital is the first to plan a listing in London. Others are bound to follow

IN the spring of 1999 Philip Richards and Michael Alen-Buckley arrived almost empty-handed at their new office — a small room in 1 Adam Street, just off the Strand in central London.
The day — April Fools’ Day — seemed apt at the time. Richards and Alen-Buckley, both highly regarded bankers at Merrill Lynch, were giving up stellar careers to start their own hedge fund, RAB Capital. The only money they had was their own, and their staff consisted of one manager, a compliance officer and a secretary.

Five years on, the little room in 1 Adam Street, still RAB Capital’s main trading floor, albeit straining under a vastly expanded workforce, is again the engine room of an ambitious and pioneering venture.

Last week RAB Capital became the first stand-alone hedge-fund company to announce its intention to float in London.

Richards, 46, and Alen-Buckley, 43, will be at the helm of a company with a market value that could be as high as 100m. Their stakes could be worth 30m each. Advised by KBC Peel Hunt, the firm will release a prospectus tomorrow revealing how much money it intends to raise.

In the past five years, Richards, a former army officer, and Alen-Buckley, who is the son-in-law of the hotelier Lord Forte, have increased their funds under management from 4m to an estimated 1.1 billion. They have 40 staff (16 of them managers), 7 hedge funds and a track record that is the envy of the City.

RAB’s first fund, the European equities fund, which was launched in November 1999, has made returns of 84% despite the tumbling markets.

Floating will for the first time allow small investors to take part in the success of a hedge-fund boutique rather than investing in one fund.

But there is growing concern that they will also be exposed to risks that at the moment are restricted to professional investors.

Watching in the wings are hundreds of other hedge-fund managers, salivating at the thought of following RAB to market and realising the value of their businesses. Investment bankers and advisers are also rubbing their hands at the prospect of a spate of similar deals.

Two funds earmarked for flotation are Thames River Capital and GLG Partners, one of the biggest hedge funds in London, with about $8 billion under management. Experts say plenty of others are looking to float as a way of cashing in.

Richards and Alen-Buckley dismiss the suggestion that this is their motive for floating RAB. “Right from the start we wanted to create a long-term business and we’re here to stay,” said Richards. “Floating is an indication of our permanence. Neither one of us will be taking cash out. We are also doing this for our staff. We have given them options over the years and this will be their chance to realise some cash. Staff loyalty is important to us and to our clients, who like the stability this offers.”

The cash raised from the float will also be used to launch additional hedge funds and bankroll the company’s rapid expansion.

Managers have already been hired for several new funds that will specialise in energy and in Japan. Small investors are likely to be attracted through a joint venture with Saga, which provides services for the over-fifties and has 7m customers.

Richards and Alen-Buckley built impressive reputations in the City working together in the late 1980s at Smith New Court, where they helped to build the stockbroker from a market value of 10m to one of 500m by the time it was sold to Merrill Lynch in 1995.

Both men had been watching the growing hedge-fund industry with interest. Alen-Buckley had numerous contacts, including leading figures such as George Soros. They spent four years at Merrill before quitting to set up RAB.

Alen-Buckley, who is taking the title of executive chairman, is described as the “public face” of the business. Richards, who goes from chief investment officer to chief executive, is more involved in strategy.

Richards runs the Special Situations fund, which is just over a year old but has already generated a return of 1,274%.

Since hedge funds are known for being opaque and secretive, observers are concerned that RAB will struggle to live with the scrutiny that comes with being a public company.

Richards said the company planned to float on the Alternative Investment Market (AIM) rather than the main market so that lengthy meetings with institutions could be avoided. “We want to spend our time managing the money, not talking about it,” he said.

“We have a simple philosophy. Our goal is to produce consistent returns in all market conditions. We think that if you work on managing the risks and reducing the downside, the upside tends to look after itself. The float is exciting but it will still be business as usual.”ENDS



Please DYOR, you are responsible for your own buying and selling timing actions.

cheers GF

Surely these two posts are useful & constructive:

I am surprised that nobody has yet woken up to the fact the 'hedge funds' are just mutual funds with enormous fees. When there were just a few boutiquey hedge funds which were difficult to access and often quickly closed to new business, the possibility of a small number of very talented people making super normal gains was a reasonable prospect, But surely it is becoming clear that with HUGE numbers of funds and assets, hedge funds collectively must collectively, only track the wider market. Its an investment for stupidos imho, half the funds are likely to our perform and half underperform, a fund of fund is going nowhere, but the half of the funds that outperform are going to deduct whacking great charges, not compensated by the half that underperform - and even underperformance will attract fees of 1% + in most cases, making an average deduction of 11% for market tracking!
--------------------------

Second one, Part of an article from the FT on saturday talking about Hedge funds:

But the FSA now wants to know if the market is overheating and whether banks are being too lenient on hedge funds in their efforts to bring in new business.

The most prominent example of wayward lending - one that still haunts Wall Street - is the Long Term Capital Management debacle in 1998, when 16 banks nearly brought down financial markets by allowing LTCM to borrow to the hilt. In its Financial Review Outlook published in January, the FSA says it was concerned about the risk posed to the financial system by hedge funds. It singles out growing competition as a potential area of concern.

It also notes that hedge funds were employing more leverage than in the second half of 2002 - although it adds that the levels were still well below those seen in the days of LTCM. A report this week by Greenwich Associates, a US-based research company, adds weight to the FSA's concerns. It argues that growing competition among banks for lucrative hedge fund business might be leading them to relax their controls on credit.

"These trends bear serious consideration on the part of hedge fund investors, not only as possible indicators of an overheated market, but also as potential harbingers of intervention by regulators in the United States and Europe," it says..

Gentlemen,

Please break it up - I have posted before - stick to the stock and not to the poster. This applies to all sides.

Thank you for your time,

Ian

xmortal said: "yes and this fad have been with us for the last 25 years, and more hedge funds are on the increase."


I think Warren Buffet is refering to current fashion of hedge funds, not that they have been established 25 years & his comments that they are a fad, I would suggest indicates he thinks they will go out of fashion as quick as they came into fashion...if the RAB price is anything to go by he is proving to be right!

I have some exposure to hedge funds which have done very well, however, and no disrespect to afficionados, this one must be the supreme irony of any such, a hedge fund begging to be shorted, now theres a first

Interesting Sequestor, be difficult to feel for RAB if they are being shorted ;-)

It`s gone down today, does that mean its NAV value has increased, very odd.

Shrewd Investors

Shrewd Snapshot: small cap action for Hambro, RAB and Webb

Published: 07:14 Fri 28 May 2004

By Graeme Davies, Companies Correspondent
Email to a friend |


A trio of deals among the smaller caps involving AAA-rated Peter Webb, the activist investors JO Hambro and successful hedge fund operators RAB Capital.

* Webb's Eaglet investment trust (EIN) has bumped up its holding in IT company Compel (CGR) following its recent acquisition of one of its major Oracle competitors.


Webb's fund added 365,471 shares to its holding, giving it a total of 4.85 million shares or 14.7% of the 30 million company. The news failed to impress investors however and Compel closed the day down 0.5p at 89.5p. Earlier this year it rose as high as 107p but has been drifting a little recently.


Earlier this month Compel announced the 2.2 million acquisition of Sysao, which it will integrate into its existing Oracle business.


* JO Hambro Capital Management has added 100,000 shares to its stake at analysis software tools developer Alterian (ALN) where it now holds 3.6 million shares or 9.2%.


The investor has made its move in the wake of last week's results by Alterian. It cut its full year losses by more than half and said it expects to substantially grow its revenues this year through its existing partners and it is also in discussion with several potential new partners. Sales rose by 18% to 5.7 million.


Alterian's share price has been on the slide for some time now having started the year with a strong run to 91p. Last night it closed unchanged at 70.5p.


* Gold exploration company Cambridge Mineral Resources (CMR) has seen its share price surge recently on the back of news of a possible bid for the company and RAB Capital, the hedge fund operation which rode the commodity surge last year so successfully, has cashed in again.


RAB has sold a total of 1.525 million shares in the past week after the share price rose sharply on the back of confirmation from the company that it was in talks that may lead to an offer. Cambridge has not identified the bidder but Canada-based companies Agnico-Eagle and Kinross Gold have been suggested. Potential bidders are believed to be keen on Cambridge's deposits in Spain

Speculation has helped to drive Cambridge's share price from 9.75p at the beginning of this year to as high as 19p but news of RAB's profit-taking encouraged some investors to follow suit yesterday and it ended up 0.625p lower
at 15.625p.

cheers GF.

-0.5p Must be already in the price g/f?

-1.75p the bull argument such as "will be 1 quick time", seems to be fading away.

My second target of 30p looks likely, it's still a healthy premium to float price remember.

The further it slips the greater the bounce will be. One of those rare occasions where the quality means a falling stock remains worthy of holding. Might even have funds for a few more soon if a couple of my others rise any further! :)

Anyone with conviction should average down from the high prices they have paid....will anyone be brave enough to post they have taken the plunge?

Third eye why dont you just quit here, what is it wiz u? hey?? YOUR COMMENTS ARE VERY VERY BAD AND REALLY THEY ARE NOT THAT SMART AT ALL. For starts, there is not comments or rumours RAB is doing bad? I assume everyone at least are in RAB for the medium-long term. The company just listed few months ago, which coincides with the declines of the markets, its price is affected by the short term pessimism that exist right now. Please stop harrasing people here are encourauging new comers to 'loose their money'

TO THE MODERATORS: PLEASE BAN THIS PERSON FROM THIS THREAD. I AM NOT THE ONLY ONE COMPLANING ABOUT HIM. THANKING YOU IN ADVANCE

xmortal filter anything you don't like. A bearish view is just as valid as a bullish one, in fact since this share was written about in such an exciting manner all it has done after a sharp spike is fall.

If you are a bull, the best thing to do, is post your reasons why we should all buy bucketloads, not try & gag the bearish amongst us, counter argument is your best attack, trying to silence what you don't like to read isn't...sorry.

Third eye. I assume u dont have RAB shares cos u dislike them so much....so why do u keep posting here . Do you do it for all the other threads too, cos almost all share are not doing well. Everyone is entitle to their opinions and im bullish because i done my research. You cannot predict what is gonna happen in the future (Warren Buffet u c) and since u like WF so much why dont you do your research before u post negative comments. So far u have posted nothing concrete. Just leave.

The moderators have said to concentrate on the share, not the poster, you are doing yourself no favours in your bull debate.

One of my points is this is very valid one:

"the FSA says it was concerned about the risk posed to the financial system by hedge funds. It singles out growing competition as a potential area of concern."

I can understand why you wish that you could get me to leave so I can't air such points.


Furthermore I think I am entitled to my opinion this has been a hyped up share to say the least also my opinion that gold has peaked & that I think mining shares have generally had their peak....it seems the market doesn't regard the future re:RAB as it once did, not too long ago.


As I say I erxpect 30p next & each call so far has been correct, perhaps that's what you don't like reading.


Some interesting earlier posts about competition too....I won't repeat them all here for your sake.


PS I'm not leaving, I am entiltled to my view as you are yours....on RAB would be welcome rather than the poster please.

YES in that case provide your so recent facts and figures that RAB is not a good investment. Please state why one should really sell their shares.

The FSA is always concerns about many things, like irregularities in share dealing and corporate managements, but what u just posted has not foundations or any bearings on how the share price is gonna behave. for your information the FTSE Other Finances benchmark (RAB is in it) is not doing very well against FTSE all share and FTSE 100. It is like say sell all Vodaphone because their shares are going down.... that not the way one should invest. fundamentals and sectors (i would say sectors in vogue play an 80% of the price in any share) Take a look at the dog of BGY it is riddle with debt and almost going down the drain BUT its share price is doing fine because electricyty/utilities sector is going up. You probably loosing money in RAB cos you bought at the top and want everyone to suffer.

It's no use assuming I bought or if I'm short or if I don't hold, that adds nothing to the value of the debate.


My reasons are posted, I'm not repeating it all, just take look back through the thread....lets turn the tables, I have yet to see a convincing post as to why the shares should be bought at this much lower price, a reason in iteslf perhaps that the shares will continue to drift in my opinion.


I can't see any justification at why these are trading at a premium to the 25p float price of circa 40%, maybe others think the same which is why it has continued to be unsupported at these much cheaper prices.


Perhaps less whineging of my reasons for posting or speculating on what my position is, might give your bull case a boost?

They were lauched at 38p not 25p. So whoever bought around fine, if not then hold. The bullish reasons were stated at the beginning of the thread (i assumed you read them too) This will outperform it benchmark in the long run when things turn around for the better for 'other finance' sector.

especially for you No-Eyes.

Platinum Capital sees hedge fund boom
Tue 1 June, 2004 13:57

LONDON (Reuters) - Investment group Platinum Capital Management says estimates of money flowing into hedge funds are conservative and the industry should see massive growth over the next six years.

Platinum forecasts hedge fund assets under management will grow to around $4 trillion by 2010, double an earlier forecast of $2 trillion by U.S. investment bank Putnam Lovell.

"The hedge fund industry today is in the same position that mutual funds were in 1980," said Craig Reeves managing director at Platinum. "It's not understood, not regulated and growing at a ferocious pace."

The mutual fund industry in the United States in 1980 was made up of small boutiques. But in the 18 years to 1998 assets under management have risen to around $3 trillion from $15 billion.

Estimates of money currently invested in hedge funds range between $800 billion and $1.1 trillion.

Most of the money managed by hedge funds now comes from private clients.

Platinum expects that to change as institutional investors from many countries -- including Asia -- start to look at hedge funds as a means of improving returns.

Platinum is a fund of hedge funds with around $300 million under management compared to $150 million a year ago. About 40 percent of the $150 million rise is due to investment gains, the rest is new money.

Platinum is regulated by Britain's Financial Services Authority, but the funds it invests in are all offshore.

Industry experts estimate that between 60-80 percent of around 8,000 hedge funds are registered with the Cayman Island Monetary Authority in the Caribbean.

Which makes the FSA investigation & warning I posted earlier in the thread even more relevant.