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Portfolio > Alternative Investments > Hedge Funds

Insider Trading, Accounting and Governance as 'Dimensions'

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DAVIDSONVILLE, Md. (HedgeWorld.com)–Robert Gabele and Peter Henry, both formerly of Thomson Financial Corp., New York, teamed up last year to create a new research business that markets its work exclusively to hedge funds–3DAdvisors LLC.

Mr. Henry is responsible for management functions outside of the research group. 3D’s core group of research analysts includes Robert Loughhead, senior accounting analyst, and Howard Sherman, an expert on corporate governance, as well as Mr. Gabele.

This firm, although formally headquartered in a small town outside of Baltimore, is a “virtual corporation,” as Mr. Henry put it. He works in Davidsonville, Md., Mr. Gabele in Fort Lauderdale, Fla., (the state of incorporation) and others are “all over the place–it has helped to be able to recruit talent without having to move everybody around.”

In the 1980s and 1990s, Mr. Gabele’s name was associated closely with insider-trading research and data. His first business, The Investnet Group, processed all the insider filings for the Securities and Exchange Commission. Thomson Financial acquired that business in 1992. Insider trading also is part of the analytical tool kit of 3DAdvisors.

The new firm also looks at certain types of behavior related to accounting practices and policies and at corporate governance issues. As the firm’s name implies, they see these distinct concerns as “dimensions,” and they believe that executive behavior in any of the three areas can indicate underlying financial or operating problems.

Mr. Henry said that the distribution of the firm’s research is limited to only 25 hedge funds, most of which pursue long/short strategies and invest in midcap and large-cap U.S. equities. That is a departure from the business model they pursued in Investnec, which had hundreds of institutional clients, thousands more retail. He expects that all 25 subscription slots for the present product (focusing on large-cap equities) will be filled by the middle of this year. He said that the firm plans to release additional products, regarding small-cap and international opportunities, in the near future.

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