Farallon Capital

Last updated
Farallon Capital Management
Company type Limited partnership
Industry Hedge fund
FoundedJanuary 1986;38 years ago (1986-01) [1]
Founder Tom Steyer
Headquarters
One Maritime Plaza
San Francisco, California [2]
,
U.S.
Area served
Worldwide
Key people
Andrew J.M. Spokes (Managing Partner)
AUM US$ 39 billion
(as of September 30, 2022) [3]
Number of employees
230+ (2021) [4]
Website faralloncapital.com

Farallon Capital Management, L.L.C. is an American multi-strategy hedge fund headquartered in San Francisco, California. Founded by Tom Steyer in 1986, [5] the firm employs approximately 230 professionals in eight countries around the world. [4]

Contents

Farallon primarily manages capital for university endowments, foundations, and high-net-worth individuals. [1] The company manages assets reportedly worth $39 billion. [6]

History

Farallon was founded by Tom Steyer in January 1986 with $15 million in seed capital. [1] Before starting Farallon, Steyer had worked for San Francisco-based private equity firm Hellman & Friedman, as a risk arbitrage trader under Robert Rubin at Goldman Sachs, and in Morgan Stanley's corporate mergers and acquisitions department. [5] [7]

Farallon was one of the first hedge funds to raise money from a university endowment. [8] In 1987, Steyer, who received his bachelor's degree from Yale, approached the university's endowment to allocate funds for Farallon to manage. [9] The Yale endowment declined based on the fees charged by Farallon. David Swensen, Yale's chief investment officer, later arranged with Tom Steyer that Farallon would initially manage an allocation of the Yale endowment for no fee. [9] After Yale's investment proved to be lucrative, many other college endowments and pensions began to invest in hedge funds. [8]

Investment strategy

Farallon claims to have pioneered absolute return investing, a model focusing on potential returns as well as risk adjusted returns. [10] Farallon invests in various asset classes including value investments, credit investments, merger arbitrage, real estate related investments, and direct investments in both developed and emerging markets. [11] As of 2005, Farallon reportedly holds positions anywhere from two to five years. [1]

According to Institutional Investor's Alpha, Steyer considers "himself as a research-oriented fundamental investor, not a trader." [1]

Farallon also practices "event driven" international investing, finding distressed international companies and helping the businesses restructure. [12] [13] [14] In 1999, Farallon bought a direct stake in an Argentine shoe company, which helped stabilize profitability as Argentina recovered from an economic crisis. [15]

In 2002, Farallon bought control of Bank Central Asia (BCA), an Indonesian financial institution, for $531 million. [16] At the time, many of Indonesia's banks were on the verge of collapse because of bad loans made during President Suharto's term and the country was seen as dangerous for foreign investment. [16] Farallon sold its stake for a profit in 2006. [17]

In the year before Farallon's investment in Indonesia, $286 million flowed into the country as foreign direct investment. After Farallon exited, that number grew to $1 billion in 2007 and $4 billion in 2008. [1] [8]

In March 2010, Farallon announced plans to refocus its investing on risk arbitrage and credit wagers and lessen its equity exposure. In addition, the firm said it would disclose more information to clients to "foster a more open culture at the hedge fund." [18]

Investment history

In 2007, Farallon in partnership with Simon Property Group and other hedge funds purchased Mills Corp, a real estate investment trust. [19]

The fund is one of the largest shareholders in Japanese electronics company Toshiba, with a stake of more than 6 percent. [20] Farallon is also one of the top-10 shareholders in Acceleron Pharma. [21]

Company

In 2006, it was reported that Farallon Capital was the largest hedge fund in the world in 2005. [22] Steyer named the firm after the Farallon Islands off the coast of the San Francisco Bay Area. [5]

Structure

Andrew J.M. Spokes acts as the firm's Managing Partner. Spokes was promoted to the position in 2012 when Steyer separated from the firm. [23] [24] Prior to his promotion, Spokes oversaw portfolio management and strategy for Farallon exclusive subadviser Noonday Global Management. [25] Spokes opened Farallon's first international office in London in 1998. [1]

Today, Farallon has 21 principals, 13 managing directors, and 35 investment professionals who oversee the firm's day-to-day operations and management. [4]

Offices

Farallon operates offices in San Francisco, São Paulo, Tokyo, Singapore, London, Hong Kong. [4]

See also

Related Research Articles

A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to improve investment performance and insulate returns from market risk. Among these portfolio techniques are short selling and the use of leverage and derivative instruments. In the United States, financial regulations require that hedge funds be marketed only to institutional investors and high-net-worth individuals.

<span class="mw-page-title-main">D. E. Shaw & Co.</span> U.S.-based investment management firm

D. E. Shaw & Co., L.P. is a multinational investment management firm founded in 1988 by David E. Shaw and based in New York City. The company is known for developing complicated mathematical models and computer programs to exploit anomalies in financial markets. As of December 1, 2023, D. E. Shaw has $60 billion in AUM, including alternative investments and long strategies.

<span class="mw-page-title-main">Soros Fund Management</span> Private investment firm

Soros Fund Management, LLC is a privately held American investment management firm. It is currently structured as a family office, but formerly as a hedge fund. The firm was founded in 1970 by George Soros and, in 2010, was reported to be one of the most profitable firms in the hedge fund industry, averaging a 20% annual rate of return over four decades. It is headquartered at 250 West 55th Street in New York. As of 2023, Soros Fund Management, LLC had $25 billion in AUM.

Event-driven investing or Event-driven trading is a hedge fund investment strategy that seeks to exploit pricing inefficiencies that may occur before or after a corporate event, such as an earnings call, bankruptcy, merger, acquisition, or spinoff. In more recent times market practitioners have expanded this definition to include additional events such as natural disasters and actions initiated by shareholder activists. However, merger arbitrage remains the best-known investment strategy within this group.

<span class="mw-page-title-main">HBK Investments</span> Investment management firm

HBK Investments is a global, multi-strategy alternative investment management firm based in Dallas, Texas. As of 2015, it manages approximately $9.7 billion and employs 200 individuals. In addition to the main offices in Dallas, the firm maintains satellite offices in New York, Virginia, London, Tokyo, and Hong Kong. Since inception in 1991, HBK's funds have delivered annualized returns of approximately 11.6%, net of fees.

David Frederick Swensen was an American investor, endowment fund manager, and philanthropist. He was the chief investment officer at Yale University from 1985 until his death in May 2021.

<span class="mw-page-title-main">Liongate Capital Management</span>

Liongate Capital Management was a global investment management firm, focused on creating and managing fund of hedge fund investments for institutional and private investors. Liongate, founded in 2003 by Jeff Holland, Ben Funk and Randall Dillard, managed a range of funds of hedge funds in both commingled funds and tailored, single client portfolios. The firm, which at it peak managed over USD 3 billion with an additional USD 4 billion in assets under advisory, had a global reach with offices in London, New York, Zurich, Dubai, Malta and Mumbai. The Liongate partners sold the firm to Principal Financial Group in 2013 as the large US insurer and asset manager wanted a hedge fund research platform in order to quickly ramp up retail hedge fund distribution in the US.

<span class="mw-page-title-main">TPG Angelo Gordon</span> American investment management company

TPG Angelo Gordon is a global alternative investment manager founded in 1988 by John Angelo and Michael Gordon who together ran the arbitrage department of L.F. Rothschild in the 1980s. The firm focuses on four main investment disciplines: credit, real estate, private equity, and multi-strategy.

Man GLG is a discretionary investment manager and a wholly owned subsidiary of British alternative investment manager Man Group plc. It is a diversified and multi-strategy fund manager that operates strategies including equity long-short funds, convertible arbitrage funds, emerging market funds and long-only mutual funds. The firm is also a founding member of the Hedge Fund Standards Board and a signatory of the Principles for Responsible investment. As of 2022, Man GLG had $35.4 billion assets under management.

Harbinger Capital Partners is a private hedge fund based in New York City, New York, founded by Philip Falcone. Harbinger is a highly diversified multi-strategy hedge fund. Notable investments have included sub-prime mortgages in the United States and the United Kingdom, such as HBOS, and LightSquared, a wireless communications company that filed bankruptcy in 2012.

<span class="mw-page-title-main">Paulson & Co.</span> American investment management firm

Paulson & Co., Inc. is a family office based in New York City. Previously, it was a hedge fund established by John Paulson in 1994. Specializing in "global mergers, event arbitrage, and credit strategies", the firm had a relatively low profile on Wall Street until its hugely successful bet against the subprime mortgage market in 2007. At one time the company had offices in London and Dublin.

<span class="mw-page-title-main">Tom Steyer</span> American businessman (born 1957)

Thomas Fahr Steyer is an American climate investor, businessman, hedge fund manager, philanthropist, environmentalist, and liberal activist. Steyer is the co-founder and co-chair of Galvanize Climate Solutions, founder and former co-senior-managing-partner of Farallon Capital and the co-founder of OneCalifornia Bank, which became Beneficial State Bank, an Oakland-based community development bank. Farallon Capital manages $20 billion in capital for institutions and high-net-worth individuals. The firm's institutional investors include college endowments and foundations. Steyer served on the board of trustees at Stanford University from 2007 to 2017. Since 1986, he has been a partner and member of the executive committee at Hellman & Friedman, a San Francisco–based private equity firm.

Elliott Investment Management L.P. is an American investment management firm. It is also one of the largest activist funds in the world.

Artradis Fund Management, founded in 2001, was an Asian long volatility biased multi strategy alternative asset manager with operations centered in Singapore and presence in the BVI and Switzerland. Its flagship funds, Barracuda and AB2, conducted market-neutral trading strategies including index arbitrage, warrant arbitrage, stock class arbitrage, convertible bond arbitrage, volatility arbitrage, volatility dispersion, and dividend arbitrage. A common theme through these strategies was to be long tail risk, primarily through volatility.

Pine River Capital Management is an American asset management firm based in Minnetonka, MN. The firm traded its investors funds using stocks, fixed income, derivatives and warrants.

<span class="mw-page-title-main">Blue Harbour Group</span>

Blue Harbour Group was an American investment firm that managed capital for pension funds, endowments, sovereign wealth funds, labor unions and other institutional investors. The company was based in Greenwich, Connecticut.

<span class="mw-page-title-main">Glenview Capital Management</span>

Glenview Capital Management is a hedge fund founded in 2000 with approximately $7.7 billion of capital under management as of March 2019. Glenview manages capital for investors through a series of private investment funds. The firm was founded by Larry Robbins, the firm's CEO and portfolio manager, and is based in New York.

Bracebridge Capital is a hedge fund based in Boston, Massachusetts. It was co-founded by Nancy Zimmerman and Gabriel Sunshine. It manages funds from the endowments of Yale University and Princeton University. It also made $1.5 billion from the Argentine debt restructuring. As of February 2016, it had $10.3 billion of assets under management, making it the largest hedge fund managed by a woman in the world. Sunshine owns a 5% stake in Bracebridge as of 2017.

Nancy Zimmerman is an American hedge fund manager. She is the co-founder of Bracebridge Capital, a Boston-based hedge fund with over $12 billion of assets under management as of June 2019. The fund manages investments for foundations, pensions, high net worth individuals and endowments, including those of Yale University and Princeton University. She gained media attention in 1997 for her involvement in the Harvard Institute for International Development's Russian aide controversy and in the 2010s for her firm’s role in Argentina’s debt restructuring. As of 2019, she is the wealthiest female hedge fund founder in the U.S.

York Capital Management is a global institutional investment management firm with approximately $18.5 billion in assets under management as of June 2019. The firm was founded in 1991 by Jamie Dinan.

References

  1. 1 2 3 4 5 6 7 Adamson, Loch (23 February 2005). "Steyer Power". Institutional Investor. Archived from the original on 3 September 2012. Retrieved 19 August 2010.
  2. ↑ Adam Zoia; Aaron Finkel (28 January 2008). Getting a job in hedge funds: an inside look at how funds hire. John Wiley and Sons. pp. 2–. ISBN   978-0-470-22648-3 . Retrieved 31 July 2011.
  3. ↑ "Farallon Homepage" . No. Homepage. United States: Farallon Capital. Farallon Capital. 13 October 2022. Retrieved 13 October 2022.
  4. 1 2 3 4 "Farallon Website".
  5. 1 2 3 Lashinsky, Adam (17 September 2008). "California's hedge fund king". Fortune. Archived from the original on 31 January 2011. Retrieved 23 July 2010.
  6. ↑ "FARALLON CAPITAL MANAGEMENT, L.L.C. Website". www.faralloncapital.com. Retrieved 2022-10-13.
  7. ↑ Robinson, Edward (9 July 2019). "Tom Steyer Made $3 Billion in Markets, Now Wants Crack at Trump". Bloomberg. Retrieved 2020-08-21.
  8. 1 2 3 Mallaby, Sebastian (2010). More Money Than God. Penguin Press.
  9. 1 2 Fabrikant, Geraldine (2007-02-18). "For Yale's Money Man, a Higher Calling". The New York Times. Retrieved 2010-07-26.
  10. ↑ Lashinsky, Adam (22 September 2008). "Hedge fund VIP Thomas Steyer of Farallon hates to lose money - Sep. 22, 2008". CNN. Retrieved 2020-08-21.
  11. ↑ Keoun, Bradley (21 March 2007). "Farallon Discloses Takeover Talks With Accredited". Bloomberg. Archived from the original on 6 November 2012. Retrieved 31 July 2011.
  12. ↑ Saltwell, Hollie. "M&A Plays the Trump card: making event driven hedge fund investing great again?". Aurum. Retrieved 2021-06-06.
  13. ↑ "Asset Manager Profiles". studylib.net. Retrieved 2021-06-06.
  14. ↑ "Andrew Spokes, the New Face of Farallon". Institutional Investor. Retrieved 2021-06-06.
  15. ↑ "Today's fund is a pioneer in the hedge fund sector, Uniform Accounting shows the fund hasn't lost its touch". Valens Research. Retrieved 2021-06-06.
  16. 1 2 McMillan, Alex (20 March 2002). "CNN.com - 'Masters of the universe' behind BCA sale - March 20, 2002". CNN. Retrieved 2020-08-21.
  17. ↑ Or, Amy (2009-06-29). "Farallon Sells Its Entire Stake in Indonesia Bank". Wall Street Journal. ISSN   0099-9660 . Retrieved 2020-08-21.
  18. ↑ Sorkin, Andrew (2010-03-12). "Farallon Plans Shake-Up, Report Says". The New York Times. Retrieved 2010-07-26.
  19. ↑ Stephen Todd Walker (7 January 2011). Wave Theory for Alternative Investments: Riding the Wave with Hedge Funds, Commodities, and Venture Capital. McGraw-Hill Professional. pp. 365–. ISBN   978-0-07-174286-3 . Retrieved 2 August 2011.
  20. ↑ "Major Toshiba shareholder Farallon calls on it to solicit buy-out offers". Reuters. 2022-03-11. Retrieved 2022-05-06.
  21. ↑ "Farallon Capital Opposes Terms of Merck's Acceleron Takeover". Bloomberg.com. 2021-11-02. Retrieved 2022-05-06.
  22. ↑ "Goldman Sachs Leads Hedge Fund Management Rankings" (PDF). Wall Street Letter. 26 June 2006. Retrieved 6 August 2011.[ permanent dead link ]
  23. ↑ Kishan, Saijel (2012-10-22). "Farallon's Steyer to Step Down as Spokes Named Manager". Bloomberg. Retrieved 2018-11-15.
  24. ↑ Lattman, Michael J. de la Merced and Peter (22 October 2012). "Farallon Capital's Founder to Step Down This Year". DealBook. The New York Times. Retrieved 2018-11-16.
  25. ↑ Strasburg, Jenny. "Farallon Names Spokes Co-Managing Partner with Steyer". Bloomberg. Retrieved 2010-07-26.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.