Seeking to capture above-average returns in a frothy energy-equity market while cushioning themselves against major commodity-price corrections, more and more high-net-worth individuals and qualified institutions are pouring dollars into a burgeoning number of hedge funds. Indeed, New York-based Hennessee Group LLC, an advisor to hedge-fund investors, notes that since 1992 hedge funds have ballooned in number from 880, with assets under management of $55 billion, to a recent level of more than 8,000, with $1.12 trillion of managed assets. Meanwhile, an increasing number of sellside energy analysts have begun exiting investment-banking firms to participate in the hedge-fund sector. This includes Shawn Reynolds, a former Petrie Parkman & Co. energy analyst who joined New York-based Van Eck Global Associates, a firm with $3 billion of assets under management, one-third of which is currently invested in energy across several hedge funds; Ryan Zorn, a former Simmons & Co. International analyst who teamed with Houston-based Saracen Energy Advisors, a $700-million investment house; and John Selser, a former Johnson, Rice & Co. researcher who joined Baton Rouge, Louisiana-based Maple Leaf Partners LP, a nearly $1-billion general hedge fund. The attraction? For both investors and former sellsiders, hedge funds offer the kind of investment flexiblity to manage market risk and volatility not available in the public market, and to potentially achieve above-average returns not correlated with the general market. For more on this, see the June issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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