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

As you are probably aware, hedge funds incorporate incentive fees within the performance of the fund, usually calculated on a monthly basis. Thus, if the fund performs above a specified target the fund manager will charge an incentive fee will be charged to the individual fund. This affects the value of the individual fund and not the value of the company itself. The company will have a separate bonus scheme for employees that will be based on company profits as a whole, distinct from the funds performance. there is a clear distinction to be made between fund performance and company performance. the fact that one particular fund has increased in value by 1200% is impressive, but it must be remembered that this is only one of a number of funds.

this looks like a promising little co., but recent hype is the reason that it has shot up so rapidly. im in for the long term but am expecting it to readjust.

Is there a danger that rash decisions may be made to achieve bonuses?


What is the base value of the fund that has increased 1200% please?


I presume the 1200 figure is the best which explains hype, but what would be the AVERAGE fund performance which is much more representitive & balanced?

All been answered on another board, would'nt waste your time with him sharecaster. Let him do the looking and the research and then come back to us and not the other way round. Should be easy to find, he knows where it is as we have been through it ALL once before, its not my fault that he cant get his head around it and understand it. He just doesnt seem able to grasp the concept.

cheers to everyone have a lovely weekend
GF.

the whole concept behind hedge funds is the "hedging" of risk. hedge fund trading has evolved significantly since the days of LTCM, and there is consequently a lot less room for the individual managers to make "rash decisions". One extreme of this evolvement is the Man Group fund manager AHL which is a computer programme that tells the traders exactly what to trade and at what price.

Thanks Sharecaster.


Would I be right about the 1200% performance being the best of the "many" ?


Do we know what sort of funds are under management at the moment...so we can judge a percentage required for both profits & NAV?

would definitely agree with that. important not to be blinded by the performance of one fund. others will have fallen in value. i would suspect that the average is low double figures if they have performed very well.

Thanks very much.

First ever hedge fund to enter AIM
Trading has exceeded directior expectations
1200%+ Return on Special situations fund
Only 34mil shares in Public hands
Directors own 90% of the shares
Pays a 0.25p dividend
Company is thinking of buying back upto the 10% of the shares held in public hands in the future
Company is looking to invest in japan, where the economy is booming. And energy.
Company is looking to recruit more fund managers and open more funds.

"Yes your such a clever person arent you." Goldfinger, are you trying to tarnish your armour?

Surely, slanging matches are for people with big imature egoes!

Certainly not bonn1e, I suggest you get hold of the proper facts before making off cuff remarks.

Ask yourself why a person posts here when he as no intention of buying or selling. Why he targets this paticulat thread and also that of the poster Hawick.

Anyway back to the facts and taken from the Investors Chronicle that featured RAB CAPITAL....................

IC view:

This looks an altogether more substantial issue than many recent Aim debutants. Not only is it profitable - basic earnings per share have risen from 37p in 2001 to 2.45 in 2003 - but the company will be a decent size on admission. And the stellar track record of Man Group, now a FTSE100 constituent, bodes well. Worth watching.

cheers GF.

So what's the average fund performance goldfinger, rather than just highlighting the best one?


What are the historic eps....fully diluted?


Was 2001-2003 the best period in recent times for a hedge fund?

Don't you think that 2.45 eps is misleading goldfinger...why would you want people to think that the eps is 2.45?

From a money AM competitor board, which according to above posts you have read:

" There is a mistake in Investor Chronicles article re: EPS. It should read 0.37p and 2.45p"

ThirdEye go and do your own Research. Dont ask others.

I and other would like to know the answers, surely helps us all get a balanced opinion.


Sorry I don't have the same bullish view perhaps that is what is annoying?


If the bulls have a strong case I'm sure they will be pleased to answer, as they have an opportunity to strengthen it?

Goldfinger, perhaps I should have simply said: ignore his comments!

Third eye, says:
"helps us all get a balanced opinion."

This can only be achieved by others putting in some effort into research to provide the balance.

One person attacking another is counter productive to meaningful discussion.

I'll ask again, see if I get an answer from some kind soul over the weekend.


What is the average growth fund rate overall, so we can get a balanced picture, rather than the one conviently picked out at 1200%.

Invisage,

There is a squelch button to delete those posters that annoy you!

I say keep the debate going, it's civilised, (and let's keep it so please!)
and surely we all want to hear the bull / bear argment here?

Andy

Im more then happy to hear a Bull/Bear opinion.

We can then say whether we agree or not. When we do our research we dont have to show all, we dont have to show any to be honest. I certainly keep some of it to myself.

If you want a balanced view then post some negatives, why should we post both.