Numbers can be deceiving. The hedge fund industry appears to be healthy, with total assets doubling in the past five years and now exceeding $3 trillion for the first time ever, according to data tracker eVestment. But most managers have been plagued by chronic single-digit returns: The average hedge fund has lagged major market indexes over the past five years, trailing the S&P 500 by 2,000 basis points last year alone. As a result, industry players are being forced to adapt. Investors are reconsidering their strategic relationships with funds and many managers are changing their management styles to better align their interests and produce the outsized returns of the pre-crisis era.
But not all firms are equally challenged. At the 12th annual Hedge Fund Industry Awards gala on Thursday, June 26, Institutional Investor recognized some of the hedge fund managers and investors who stand out not only for their performance but for their thoughtful approach to asset management in this challenging market environment. More than 500 guests and honorees from across the hedge fund community — representing managers, funds of funds, consulting firms, endowments, foundations and corporate and public pension funds — gathered at New York’s ritzy Mandarin Oriental for an evening of celebration over champagne and a three-course dinner.
Among the most distinguished guests were Joshua Friedman and Mitchell Julis, who were presented the Manager Lifetime Achievement Award by II editor Michael Peltz in recognition of their contributions to the industry over their nearly four-decade-long careers, much of which was spent together. Friedman, 58, and Julis, 59, got their starts at Goldman, Sachs & Co. and Wachtell, Lipton, Rosen & Katz, respectively, before teaming up at Drexel Burnham Lambert in the 1980s. After Drexel’s famed collapse, the duo founded Los Angeles–based Canyon Partners, a now $24 billion firm that was voted the top Credit-Focused Hedge Fund Manager on Thursday for the second consecutive year. Friedman and Julis had many people to acknowledge for their success, but above all they thanked their mothers, who accompanied them to the dinner.
Peltz also presented the Outstanding Achievement Award to Glenn Fuhrman and John Phelan of MSD Capital. The co-managing partners of the New York–based firm, which they founded in 1998 to manage $400 million for personal computer magnate Michael Dell’s wealth, have expertly guided MSD through several bear markets. The firm now has 105 employees and manages $15 billion, up from $400 million when Fuhrman and Phelan started.
After being presented their awards, the Canyon Partners and MSD Capital executives were invited to the stage for two separate question-and-answer sessions, during which they shared their views on the industry and advised the younger generations in the hedge fund community to take chances and not hold back. But it wasn’t all business: Julis, who roomed with Friedman at Harvard University in the late 1970s, joked about “living together before we got married ... in business,” while Fuhrman and Phelan talked candidly about what it’s like to work with Dell, one of the world’s wealthiest people who has transformed his eponymous company from a garage-based experiment into the third-largest PC seller on the planet.
The gala brought together some of the industry’s best and brightest and was filled with lively conversation between veterans and newcomers. In total, there were 105 nominees in 23 hedge fund manager, investor and consultant categories competing for recognition. The master of ceremonies, CNBC’s Melissa Lee, host of Fast Money and Options Action, introduced the program and presented the remainder of the awards, including Endowment of the Year (Bowdoin College), Institutional Hedge Fund Manager of the Year (Fortress Investment Group) and Early Stage Hedge Fund Investor of the Year (Blackstone Alternative Asset Management).
Several firms repeated wins from 2013: Citadel, the Multistrategy Hedge Fund Firm of the Year; Perry Capital, the Event-Driven Hedge Fund Manager of the Year; and, China Investment Corp., the Sovereign Wealth Fund of the Year.
The ceremony also honored Dan Carroll, winner of II and SumZero’s InvestPitch competition for emerging managers to share one of their best investment ideas, and the Hedge Fund Rising Stars, who were profiled in the June issue of Institutional Investor magazine. These 30 up-and-coming professionals stand out as future leaders of the global hedge fund community, working for hedge fund managers, investors, prime brokers and consulting firms. Several have even launched their own firms. These talented young professionals represent an important shift in the makeup of the industry as many are products of humble upbringings and have fought their own way to the top.
Here is a full list of last night’s award winners:
2014 Investor and Consultant Winners
Large Public Plan of the Year, Connecticut Retirement Plans and Trust Funds
Small Public Plan of the Year, City of Philadelphia Municipal Retirement System
Corporate Plan of the Year, United Parcel Service of America
Foundation of the Year, Margaret A. Cargill Philanthropies
Endowment of the Year, Bowdoin College
Healthcare System of the Year, Cook Children’s Health Care System
Sovereign Wealth Fund of the Year, China Investment Corporation
Family Office of the Year, Acadia Investment Management
Hedge Fund Consultant of the Year, David Jallits, Cambridge Associates
Outsourced CIO of the Year, Perella Weinberg Partners
2014 Hedge Fund Manager Winners
Institutional Hedge Fund Manager of the Year, Fortress Investment Group
Emerging Hedge Fund Manager of the Year, Andurand Capital Management
Large Fund of Hedge Funds Manager of the Year, J.P. Morgan Alternative Asset Management.
Small Fund of Hedge Funds Manager of the Year, Alternative Investment Management
Early Stage Hedge Fund Investor of the Year, Blackstone Alternative Asset Management
Equity-Focused Hedge Fund Manager of the Year, Glenview Capital Management
Event-Driven Hedge Fund Manager of the Year, Perry Capital
Credit-Focused Hedge Fund Manager of the Year, Canyon Capital Advisors
Hybrid Hedge Fund Manager of the Year, GSO Capital Partners
Macro-Focused Hedge Fund Manager of the Year, Systematic, Two Sigma Investments
Macro-Focused Hedge Fund Manager of the Year, Discretionary, Caxton Associates
Multistrategy Hedge Fund Manager of the Year, Citadel
Relative Value Hedge Fund Manager of the Year, Aristeia Capital
The winners and nominees were selected by Institutional Investor magazine’s editorial staff based on candidates chosen in a public call for nominations. The magazine group then conducted a wide survey of U.S. institutional investors and invited them to vote for the manager nominees. Hedge fund managers were invited to vote for the investor nominees.
See the full list of profiles on this year’s Hedge Fund Rising Stars. See also InvestPitch winner Dan Carroll’s best investment idea.
