Hedge Fund Awards 2014

Partners Loren Katzovitz and Patrick Hughes spent a full year establishing GGT’s multi-manager foundations before it began trading. That care and attention to detail is now paying dividends. Being a wholly-owned subsidiary of Guggenheim Partners provided Katzovitz and Hughes with the resources to de- velop the infrastructure they needed to ensure success for everything from technology to recruitment. “When Loren and I sat down to review the opportunity with the rest of our partners at Guggenheim Partners, we want- ed to focus on those critical issues needed to insure the highest probability of success,” explains Hughes. From the beginning, Katzovitz and Hughes knew that suc- cess would require addressing the needs of two important groups: portfolio managers and clients. Addressing these needs required commitment from their partners at Gug- genheim, including: • Considerable working capital to design and build a robust state-of-the-art risk, compliance and reporting infrastructure and trading floor • Flexible ownership structure to allow PMs and employ- ees to own equity in the business • Significant seed investment for the Fund: recently in- creased to $600 million Knowing that the commitments were in place allowed GGT’s management to focus on developing an infrastruc- ture to attract the most talented and seasoned portfolio managers and to satisfy the transparency needs of clients. Seasoned teams The focus of Katzovitz and Hughes was to identify expe- rienced portfolio managers who had consistent returns and significant investment experience. Stability of previous employment was also an important factor in deciding who to recruit to the firm. The average tenure of their portfolio managers at previous jobs has been six to seven years. “We were looking for stability and we wanted to encourage it,” explained Katzovitz. “We were looking for portfolio man- agers who had a repeatable process and a performance www.acquisition-intl.com 2014 International Hedge Fund Awards Guggenheim Global Trading record over a number of years that could be verified – sea- soned professionals who, in previous environments, could have been successful in starting their own hedge funds.” It’s fair to say there was an element of good fortune for GGT when it came to recruitment – regulatory changes meant many of the banks were preparing to cast off proprietary groups, and the capital and regulatory requirements to start up a hedge fund had become prohibitive for many portfolio managers who might have otherwise thought about going out on their own. But there were other boutique firms waiting to snap up the best of the available talent. So, in a move that could come straight out of an HR ‘how to do it’ manual, Katzovitz and Hughes sat down to work out what was needed to recruit the most talented portfolio managers and to make GGT the obvious choice. They focused on culture, ownership struc- ture, location and compensation. “This was a great opportunity to bring in seasoned portfolio managers,” said Hughes. “We are trying to develop a cul- ture in which portfolio managers interact with each other. We believe that’s the way to get the best performance for the fund. We’re encouraging portfolio managers to help each other out and not to create independent silos.” Katzo- vitz and Hughes are focused on minimizing the overlap of the portfolio managers covering the same sectors in order to foster a more collaborative environment. The ownership structure allows portfolio managers to own equity in GGT. This unique structure, not generally seen in the multi-manager funds, allows portfolio managers to be owner-operators of GGT and not simply hired hands. GGT is also strategically setup in Purchase, NY, twenty minutes north of Manhattan, a decision that allows the firm to be a viable attraction for managers from CT, NJ and Manhattan. Nearly all the portfolio managers currently operate out of Purchase. However, Katzovitz and Hughes have no diffi- culty with taking GGT to where their targeted managers are located. Whether it’s in San Francisco or in Europe, they Fact File Firm: Guggenheim Global Trading (GGT) Web: guggenheimpartners.com Name: Loren Katzovitz Email: loren.katzovitz@ guggenheimpartners.com Name: Patrick Hughes From the beginning, Katzovitz and Hughes knew that success would require addressing the needs of two important groups: portfolio manag- ers and clients. Address- ing these needs required commitment from their partners at Guggenheim Any chef will tell you that when it comes to creating an award-winning dish, preparation is the key: whether that’s setting up the kitchen, sourcing the ingredients or making the dish. And preparation was certainly a key factor in securing for Guggenheim Global Trading (GGT) the Overall Multi-Strategy Hedge Fund of the Year award. GGT is the investment manager for the GGT Multi-Strategy Fund (Fund), which launched in January 2012. Overall Multi-Strategy Hedge Fund of the Year 6