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Krieger Revamps Northbridge Funds

Prominent currency trading manager Andy Krieger is overhauling his Edgewater, N.J., hedge fund firm Northbridge Capital Management after a string of negative returns last year cost the firm all but a fraction of its assets.

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Prominent currency trading manager Andy Krieger is overhauling his Edgewater, N.J., hedge fund firm Northbridge Capital Management after a string of negative returns last year cost the firm all but a fraction of its assets. Krieger told AIN he is in the process of closing three funds--Sigma, its 3:1 levered version Sigma 3X and NorthStar Strategy. “The strategies were not working the way we had hoped, and it wasn’t the direction I wanted to take the firm,” he said. In their place, a new fund, Northbridge Partners, will launch in the coming months, said Krieger. The Partners strategy--mainly relative value and volatility arbitrage--was funded with $40 million of proprietary capital last June, he added, noting that he has investor commitments of over $100 million.

“Sigma and Northstar were attempts to computerize certain strategies that [managing director] Ron DiRusso was directing, which turned out not to be worth it,” Krieger continued. Sigma and Northstar were down about 8-9% on the year (2005) by the time a decision was reached to close them, he explained.

DiRusso departed Northbridge last July and is now at Hyman Beck. “As far as I know our system made money overall,” he said. “We made around 3 [percent] and change in 2003 and six and change in ’04.” DiRusso conceded that the funds were down about 7% year-to-date at the time of his departure, but that the strategies on the whole were profitable. “It had nothing to do with any big losses or anything like that--trust me,” he said of the decision to close the funds.

At its peak in December 2004, Northbridge had a combined $300 million in its Sigma and Sigma 3X, with the remaining $53 million in Northstar, a statistical arbitrage fund that launched in May 2002 (AIN, 5/20/02). By last September, the firm’s total assets had shrunk to $13.1 million, according to Sol Waksman, founder of The Barclay Group in Fairfield, Iowa, which tracks performance data of managed futures and hedge fund firms. Through the first nine months of 2005, Sigma was down more than 10% year-to-date, while Sigma 3X and NorthStar were down 32% and 7.2%, respectively, said Waksman.

Northbridge’s principals have also attracted negative attention for other reasons. Krieger was at one point charged with second-degree theft and conspiracy for clearing more than one acre of state land near his home in Alpine, N.J.--charges that could have meant a 10 year prison sentence. Krieger later pleaded guilty to the lesser charge of criminal mischief (AIN, 4/4).

In 1987, at the age of 31, Krieger earned $300 million for Banker’s Trust Company but quit the firm--since absorbed by Deutsche Bank--in February 1988, reportedly due to dissatisfaction with his $3 million bonus. A Deutsche Bank spokesman declined to comment, citing firm policy. After a stint with George Soros, Krieger founded KB Currency Advisors with Jonathan Berg, a former Banker’s Trust colleague who is currently ceo at Vega Asset Management. Calls to Berg and Soros were not returned by press time.