New Managers May 2012

47N Series
Younger managers need a certain type of director

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47 Degrees North Capital Management is a specialist alternative investment firm, and a pioneer in early-stage hedge fund investing. It was selected as one of three successful candidates out of 97 applicants to manage the emerging hedge fund managers program at CalPERS.

47N is a leading proponent of corporate governance in the hedge fund industry; so the objective of this series of articles is to discuss and inform on current corporate governance issues.

The old joke about the consultant who goes to Heaven complaining there must be some mistake - he is far too young to be there - only to be met by the response that, according to the hours he's billed his clients, he is 104 years old. Change "consultant" to "professional fund director" and "hours billed" to "number of boards sat on" and you capture the current controversy surrounding firms in the business of supplying directors to hedge funds. The difficulty of diligently carrying out corporate governance duties while sitting on so many boards (some individuals sit on hundreds of boards) is not hard to imagine - especially when complicated strategies are involved or when difficult issues arise.

47N considers three "pillars" of corporate governance before investing; alignment of interest, control of assets and transparency. Few important corporate governance principles get such little attention as the second of these - control of assets - or at least not until it's too late. In the midst of the credit crunch in 2008 a lot of lessons were learned (again) - one of these is the importance for investors to have control over their investments when push comes......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.