Another hedge fund manager who previously closed down his fund has reopened a new, fresh one. Davide Erro, formerly of Hong Kong-based Gandhara Capital, has launched the Turiya Fund. It is a long-short equity fund that takes concentrated positions and emphasizes the earnings and earnings potential of companies.
It began trading on April 1. So far, Erro has only raised $300 million, underscoring the difficulty of opening a new fund after closing down a losing fund. In February 2009, Erro, a U.S. and Italian citizen, returned cash to investors in his previous fund, the Gandhara Master Fund.
Gandhara was founded in 2005 by Erro, a former managing director and global portfolio manager at the DB Advisors division of Deutsche Bank AG and prior to that head of the Asia division at Goldman Sachs equity arbitrage.
At its peak, Gandhara, which specialized in Asian and European long/short fundamental stock picking, managed as much as $3.8 billion. Through 2007, it had an annualized return of between 18 percent and 19 percent. In 2008, the Gandhara Master Fund fell 19 percent, half of those losses coming from private equity positions.
Erro’s losses were not as bad as many other funds that year. Still, it had received redemption requests for about $800 million of the roughly $2.5 billion that was still in the fund at year-end.
Some investors thought it would keep going, given that the losses were not insurmountable and he had a modified high-water mark, which would have allowed it to charge a 10% performance fee until it earned two and a half times its loss. It returned 85 percent of the fund’s NAV to investors on April 1, 2009.
Turiya is a Hindu philosophy that believes that the state of pure consciousness is beyond the normal mind states of sleep, dreaming and awareness.
Stephen Taub, who has covered the hedge fund industry for 30 years, is a contributing editor to Institutional Investor and Absolute Return-Alpha magazines.
