Michael Shannon Title: Managing Member, Portfolio Manager, Investment Committee Member Years with present firm: 23 Years in financial services: 31 Investment/asset class focus: Alternatives/Liquid Alts
Roy Behren Title: Managing Member, Portfolio Manager, Investment Committee Member Years with present firm: 25 Year in financial services: 32 Investment/asset class focus: Alternatives/Liquid Alts
Asset Management Firm: Westchester Capital Management Firm’s headquarters: Valhalla, New York Year firm was founded: 1980 Number of employees and/or partners: 18 employees Assets under management/advisement as of Dec. 31, 2018: $3.8 billion
Increased market volatility last year prompted Envestnet to add a new asset class category to the Asset Manager Awards: liquid alternatives. The new award aims to recognize the growth — and importance — of this asset class, especially as the bull market ages, according to Envestnet | PMC Chief Investment Strategist Tim Clift.
The inaugural award went to Westchester Capital Management’s Merger Fund, which is managed by Roy Behren and Michael Shannon, a team that has been together for 25 years.
As Envestnet noted in its analysis, the strategy won “due to its ability to generate strong and positive uncorrelated returns in a period where equity markets were falling and most liquid alternative indices ended in the red. Merger arbitrage was the best performing liquid alternatives strategy, and [Westchester] led its peers.”
The firm itself has been in business for about 30 years, while the strategy began in 1989. It is the first publicly traded mutual fund to practice a “merger arb” strategy, says Behren. “It’s a non-typical strategy for a mutual fund, because it’s a hedge strategy.”
Shannon, who came to Westchester from JPMorgan’s M&A team, believes the fund’s size — $4 billion — provides “economies of scale” in which its portfolio managers “have a decent amount of influence in terms of when we take a position, [as] we tend to be one of the top 10 shareholders,” he says.