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February 17, 2004 at 07:00 PM
SAN FRANCISCO, Calif. (HedgeWorld.com)-Cannell Capital LLC, investment adviser for a stable of long/short hedge funds with a record of corporate activism, is distributing 15% of the capital of all of its funds to investors.
This month’s distribution marks the third time that the 14-year-old fund has returned money. The first such occasion took place in 2001, when Cannell returned US$18 million, or 10%, to investors in the Cuttyhunk Fund Ltd.
The second distribution occurred in 2002, when Cannell implemented stricter redemption policies in order to encourage US$132 million in redemptions from certain foreign investors. It also redeemed another US$55 million in regular redemptions at that time.
According to managing member J. Carlo Cannell, this third distribution will be pro rata, except for certain employees and members of the board of advisers. The advisers keep their money in as a benefit for their assistance and at their option. Each member of that board has availed himself of that option.
He is returning the capital because “the mortality rate of hedge funds with more than a billion dollars of assets under management is very high,” and he wants to keep his own at a size appropriate to his strategy.
“I think about that every time we rise to that level through retained earnings. I would like to think that we practice prudence over greed,” he added.
He said that his strategy involves a “low analyst ratio.” The firm likes to buy companies followed by few sell-side analysts in order to trade in areas of imperfect information dissemination. “If there are 25 brokerage firms publishing reports on a company, my eyes glaze over. What is the edge?”
