Former Passport Capital portfolio manager and risk management chief Tim Garry is preparing to debut a long-short equity fund, a potentially high-profile launch in an otherwise tough environment for start-ups.
The firm will be named Pelorus Jack Capital, after a Risso’s dolphin that was famous in the early 20th century for escorting ships through a passage of water in Cook Strait, New Zealand. It is set to launch in the first or second quarter of 2017.
Garry was the No. 2 man at Passport, the well-regarded, $4.4 billion San Francisco based long-short equity firm headed by John Burbank. Garry left Passport in January 2016.
A graduate of Boston College, where he received an AB in philosophy and English and an MSF in finance, Garry, 37, joined Passport in December of 2007 after starting his career at the Boston-based money manager State Street Global Advisors. As co-chairman of Passport’s risk committee, Garry is credited with dampening the return volatility at Passport, which had developed a reputation for producing lumpy returns.
In a January 2016 letter to investors announcing Garry’s departure, Burbank expressed support for his deputy’s future plans. “Given his achievements at Passport, Tim is ready for a new role with an increased level of responsibility,” Burbank wrote. “We look forward to supporting Tim in his future endeavours and appreciate his many valuable contributions to Passport.”
Despite his pedigree, however, Garry faces some headwinds. The current investment environment has not been kind to fundamentally focused stock-pickers; the HFRI weighted composite index is up only 4.19 percent year to date through the end of September, with equity focused hedge funds not doing much better at 4.22 percent. The Standard & Poor’s 500 index is up 7.82 percent for the same time frame. Hedge funds as a group have not out preformed the S&P 500 since 2008, when the index lost 37 percent.
Those results, coupled with complaints about perennially high fees, have left many investors frustrated with hedge funds in general, making it harder for new managers to launch. Managers with a reputation and established track record like Garry’s, however, do still remain in demand by investors, who also recognize that many of the industry’s star managers may never again replicate the strong results they enjoyed earlier in their careers.
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Follow Imogen Rose Smith on Twitter at @imogennyc.
