Analysis: Titan's taste for small funds seen behind its SAC exit

Tue Jan 8, 2013 5:27pm EST
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By Svea Herbst-Bayliss

BOSTON (Reuters) - Money manager Titan Advisors has decided that bigger isn't always better.

The firm, which manages about $3 billion on behalf of pension funds and wealthy individuals, has been shifting some of the money it invests with roughly two dozen hedge funds away from some larger funds into smaller ones, according to letters it has sent to investors.

One of the most noteworthy moves was its decision to pull its money from Steven A. Cohen's SAC Capital Advisors at a time when the $14 billion hedge fund is in the spotlight in an ongoing insider trading investigation.

The decision by Titan, a so-called hedge fund of funds, turned some heads on Wall Street because the firm's founder, George Fox, is a friend of Cohen's and his Port Chester, New York-based investment firm is one of SAC Capital's oldest outside investors.

But over a year ago, Titan began shifting some of the money it invests away from larger funds into smaller ones.

Titan is in the process of redeeming money from Bill Ackman's $11 billion hedge fund firm Pershing Square Capital Management, and in 2011 pulled all of its money out of $34 billion Brevan Howard Asset Management, one of the world's largest funds, according to the investor letters. Reuters reviewed 11 letters sent in the past two years.

Titan recently allocated money to GS Gamma, a New York-based fund with less than $1 billion under management, and BHR Capital, also in New York, with roughly $1.5 billion in assets.

Titan, according to a person familiar with the firm, had between $75 million and $100 million invested with SAC Capital.   Continued...

An exterior view of the headquarters of SAC Capital Advisors, L.P. in Stamford, Connecticut, in this picture taken December 13, 2010. REUTERS/Mike Segar