Dan Gold has been on my list of hedge fund managers to watch for several years. He has a noteworthy pedigree, having left Deutsche Bank, where he ran a prop trading desk in London, to launch his own hedge fund in 2004. His firm, New York- and London-based QVT Financial, runs a $7.4 billion relative value multistrategy fund with a global view, focusing on developed markets. It is an investment approach that should do well in the current economic environment.
Indeed, QVT has a similar feel to better known TPG Axon Capital Management — the hedge fund run by former Goldman Sachs proprietary trading star Dinakar Singh. The two firms began within a year of one another (TPG Axon launched in February 2005) and were global from the start. Although both managers have a background in prop trading — Singh was co-head of Goldman’s Principal Strategies department in London — Axon has had the far higher profile than QVT, in part because of the Goldman sheen.
Until now. It seems Dan Gold is everywhere these days. His fund is showing up as a player in some major global restructurings. He is even getting involved in, of all things, Turkish soccer.
QVT is embroiled in a long-running fight with Galatasaray Sportif Sinai ve Ticari Yatirimlar, the media and marketing company associated with one of Turkey’s most successful soccer teams, Galatasaray. As Galatasaray Sportif’s largest minority share holder, QVT has been seeking to block the company’s proposed merger with its majority shareholder, Galatasaray Spor ve Futbol Isletmeciligi Ticaret — that is, the soccer club.
Gold says that minority shareholders are not getting fair treatment. He took his protest to the Capital Markets Board — Turkey’s equivalent of the Securities and Exchange Commission. Among QVT’s grievances are that the price of the tender offer is “artificially low” and that a $223 million loan the spin-off company made to its soccer parent and related entities should be repaid.
“There is no question we are in the right morally, that we are in the right side of the law by far,” says Gold, who spoke to me last week by phone when QVT’s fight with Galatasaray looked to be coming down to the wire. If the CMB sides with the company and the deal is allowed to go ahead, Gold warns, “foreign investors in Turkish markets ought to be pretty concerned.”
Last week the CMB requested more disclosure from Galatasaray Sportif about the repayment of the loan and said, essentially, that the tender offer has to be compliant with Turkish securities law. But the regulatory agency did not halt the deal. Immediately afterward, QVT tendered 60 percent of its stake in Galatasaray Sportif, and now holds about 7 percent of the publicly traded shares.
QVT’s investment in Galatasaray Sportif sheds light on how Gold thinks. The level of enthusiasm for soccer in Turkey is, as he puts it, “just insane.” Soccer is the only serious national sport in a country with a population of 73 million whose media markets are expanding, and when sports and media collide there is usually money to be made. That is the opportunity that QVT saw. In fact, the firm has taken stakes in three publicly traded companies that are spin-offs from Turkish soccer clubs.
Gold appears to have been right about the opportunity, if not about Galatasaray Sportif’s management. (The company did not respond to e-mail requests for comment.) Although that investment might not have worked out the way Gold wanted, it’s just one of many deals where QVT is involved.
QVT also holds Dubai World bonds, including ones from the troubled conglomerate’s real estate subsidiary. Last year QVT led a group of around 20 real estate subsidiary creditors, holding more then a quarter of the $3.52 billion of the outstanding debt in question. They threatened to take Dubai World to court in the U.K. in an effort to take over its real estate holdings if the conglomerate did not pay up. Dubai World has now agreed to make these creditors whole.
QVT was also among the hedge funds listed as providing rescue financing to CIT Group when the New York–based middle market lender filed for a pre-packaged Chapter 11 bankruptcy last fall.
Gold comes across as smart and more than a little arrogant (shocking for a hedge fund manager, I know). But he is also refreshingly outspoken. He says things like this: “It is easy to misconstrue and make it seem like invaders from the U.S. are trying to seek control of Turkey’s prized and beloved football team, Of course, that is nonsense. We are not trying to run the football team or pick players. This is a minority stake in a financial subsidiary. It is simply that they promised to pay cash flows. They now don’t want to pay them, and through this tender offer, they want to rip us off. It just as simple as that.” Obviously Gold is talking his book — but I like the fact that he sounds so genuinely indignant. He really cares about the outcome.
