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Alternative Market Briefing

Kellner DiLeo launches new fund focusing on the unique return characteristics of matched book securities lending

Wednesday, June 17, 2009

From Kirsten Bischoff, Opalesque New York:

The dismal performance of hedge funds in 2008 left many investors shocked as their hedge fund investments proved to be much more correlated to the markets (and to their other investments) than they had previously thought possible. Because of this, investors are likely to conduct more extensive due diligence to determine if their hedge fund investments are providing true diversification going forward.

New York-based hedge fund manager Kellner DiLeo & Co. launched a fund in January 2009 based on its long-standing matched book securities lending business via the KDC Alpha Securities Fund, LP. The firm has participated in securities lending transactions as an adjunct to its merger arbitrage fund that enabled greater tax efficiency for investors in that strategy. With over 25 years in the business, a seasoned team of stock loan professionals, and a proprietary front-end technology platform, the business has prospered in recent years and is poised to continue its momentum.

The firm is currently focusing many of their asset raising conversations on the importance of non-correlation and the consistency of this fund’s pure alpha returns. The strategy currently utilizes an asset base of approximately $115m, which enables the group to transact with over 100 counterparties including major banks and broker-dealers. This activity returned +13.91% net of fees in 2008. The team was......................

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