The Morning Brief: John Burbank’s Passport Starting Private Capital Pool

Passport Capital has so far raised more than $27 million for a new co-investment vehicle, Passport Partners, according to a regulatory filing. Passport Partners will invest in private companies, according to a knowledgeable source. It requires a $1 million minimum investment. The San Francisco-based firm founded by John Burbank III currently manages $3.5 billion, according to its website.

Most hedge fund managers believe there is much ado about nothing when it comes to the JOBS Act. According to a survey conducted by London-based Preqin, 50 percent of U.S. managers feel the act, which permits hedge funds and other private partnerships to advertise and promote, will have no significant impact on the industry. “Many managers believe that the audience they target — for many hedge funds managers, large accredited institutional investors — is better reached through traditional methods of connecting and building relationships rather than through mass marketing,” Preqin notes in its monthly hedge fund report. In fact, just 4 percent of managers responding to Preqin’s survey they have already registered under the SEC’s Rule 506(c), which allows general solicitation. Twenty percent of hedge fund managers said they have discussed the possibility of advertising while 63 percent said they will never, or not at this time, market under the JOBS Act. When asked about the different obstacles that are preventing them from marketing funds under the JOBS Act, the biggest factor cited was the additional cost, mentioned by 42 percent of the respondents. Interestingly, 21 percent said they do not want to be the first to market. “This suggests that more managers may be tempted into advertising if this is a step taken by their competitors,” Preqin states. Indeed, the most notable manager to embrace the new marketing rules is Chicago-based Balyasny Asset Management, the $4.3 billion firm that earlier this year advertised in Pensions & Investments.

Alex Porter, who learned his hedging craft at A.W. Jones & Co., credited as the first hedge fund, died of colon cancer on April 18. He was 75. Porter was the founder of what is known today as Amici Capital. He founded the New York firm in 1976 as Porter Management, which became Porter Orlin in 2005 and Amici Capital in 2013. According to Bloomberg, Porter joined A.W. Jones as a portfolio manager in 1967, at first as a probationary hire managing a hypothetical $1 million portfolio. According to the account, he immediately lost this “money” but was given a second chance and was kept on. James Grant, who publishes Grant’s Interest Rate Observer, called Porter one of “the last practitioners from the A.W. Jones era,” adding that Porter carried the long-ago notion of a “hedged” fund as one that is “long and short and thereby inured to the vicissitudes of the overall market.”


Good news for hedge fund managers who are still embracing momentum internet stocks. Shares of Facebook jumped 2 percent to 3 percent in after-hours trading Wednesday, following a report of quarterly earnings that easily beat consensus forecasts. Revenues also came in higher than expected. The social media pioneer also announced that its chief financial officer, David Ebersman, is leaving the company, to return to the health care industry. Shares of Zynga jumped 4 percent in after-hours trading even though the online gamer reported a slight loss that was in line with expectations along with other metrics that were disappointing.

Shares of Michael Kors dropped nearly 2 percent one day after Stephen Mandel, Jr.’s Lone Pine Capital disclosed it owned nearly 11.3 million shares, or 5.5 percent of the fashion retailer. In his first- quarter letter to clients, Mandel disclosed that Michael Kors was the fund’s sixth largest holding as of the end of March.