20/04/2011 Author: Shannon Hawthorne

Michigan University to make two new hedge fund hires

Michigan State University (MSU) is boosting its allocation to hedge funds, HFMWeek has learned.

The trustee finance committee for the university’s $1.2bn Common Investment Fund recommended that the board of trustees hire two new hedge fund managers – Boston-based hedge fund CrossHarbor Capital Partners, and Contrarian Capital Management, which focuses on distressed investing – at a meeting last week.

The move follows another hedge fund hire made in February this year, when the trustee finance committee recommended that the board invest $20m into $3.3bn global long/short equity manager Conatus Capital Management.

According to an internal memo, the move was initially recommended by Cambridge Associates, the fund’s investment adviser. The $20m investment in Conatus Capital’s Overseas Fund will be funded by the redemption from the SCP Atlantic Fund, the flagship equity vehicle of Shumway Capital Partners, whose founder Chris Shumway announced that the firm will be returning all external capital to investors back in February.

As of October 2010, the Common Investment Fund targeted an absolute return allocation of 25%, with a maximum of 30%. The portfolio includes long/short equity, event-driven, arbitrage and distressed securities funds.

MSU is the latest in a number of endowments looking to increase exposure to hedge funds. Last month, HFMWeek revealed that the $920m University of Kentucky endowment fund had doubled its target allocation to hedge funds from 10% to 20%, with the increase shared between the fund’s three existing hedge fund managers: Grosvenor, Gam and Berens.