[NEW YORK] Solomon Kumin, who was chief operating officer of billionaire Steven A. Cohen's SAC Capital Advisors, is on track to gather US$1 billion (S$1.33 billion) for his hedge fund firm when it starts trading in March, according to a person familiar with the matter.
Folger Hill Asset Management will allocate money to a group of in-house managers to trade equities, said the person, who asked not to be identified because the information is private. Mr Kumin, 39, declined to comment on the capital raising.
Mr Kumin, whose responsibilities included recruiting, started Folger Hill with Todd Rapp, the former chief risk officer at Highfields Capital Management, a Boston investment firm. He joins Gabriel Plotkin, one of the top money managers at SAC, who raised about US$700 million for his new hedge fund, Melvin Capital, which started trading Dec 11, two people with knowledge of the matter said last week.
Mr Kumin left SAC last year after a decade with the Stamford, Connecticut-based hedge fund firm, which paid a record fine to settle US charges of insider trading. Cohen, who agreed to stop managing money for clients as part of the settlement, has since changed the name of his firm to Point72 Asset Management, which oversees about $10 billion of his own fortune. Cohen was never charged criminally with any wrongdoing.
New Investment At least eight former SAC money managers and analysts pleaded guilty or were convicted of using confidential and material information to profit, while two settled with federal regulators without admitting or denying wrongdoing. Kumin hasn't been accused of wrongdoing.
Folger Hill, based in New York and Boston, had a $400 million investment from holding company Leucadia National Corp. in a deal that required it to raise at least US$400 million from other investors, according to an August filing. Richard Handler, the chief executive officer of Leucadia, has joined Folger Hill's board.
Within the next two years, Mr Kumin's firm plans to hire as many as three money managers each for an unspecified number of industries ranging from energy to technology, according to a presentation obtained by Bloomberg News. Within four years, it plans to include Asian investments, with Europe after that. The total number of hires was not included in the presentation.
The hedge fund firm plans to start a quantitative portfolio that will make trades based on data collected from its other portfolios and use borrowed money to help generate profits, the presentation said.
Folger Hill will charge early investors a fee of 10 per cent to 17.5 per cent of profits. After it raises $1 billion, clients will pay a fee of 15 per cent to 20 per cent depending on how long they lock up their money with the firm, according to the presentation. Folger Hill will pass on all operating expenses to clients instead of charging a standard management fee.
Traditionally, hedge fund firms have charged investors 2 per cent of assets as a management fee along with 20 per cent of profits as an incentive.