Hedge funds going strong despte Calpers’ choice

The flood of cash into hedge funds is still going strong despite the California Public Employees' Retirement System's announcement earlier this week that it was abandoning the category.

Pension-fund giant Calpers, which said it will divest $4 billion in hedge-fund investments, was one of the leaders in bringing pension money to hedgies, fueling explosive growth over the past decade.

The departure is viewed as a bad omen for the industry, which has underperformed the broader market indexes for the past five years.

However, investors appear to be coming out of the woodwork looking for the next market rock stars. New hedge funds raised $15.6 billion in the first half of the year — the most since just before the financial crash of 2008.

That high-water mark of $19.5 billion occurred during the first six months of 2008.

Six of the 47 new funds raised more than $1 billion — a stark contrast to last year when only one new fund managed to raise $1 billion, according to a survey by Absolute Return, a hedgie news and data provider.

The hot new managers are coming from such names as Ziff Brothers family office, Seth Klarman's Baupost and Eric Mindich's Eton Park Capital.

Stock pickers are disproving the notion of a market downturn, raising $10.6 billion, or 68 percent of the total. Former Baupost co-portfolio manager Herb Wagner set the record with Finepont Capital, which raised $2 billion to invest in worldwide stocks by July 1.

Industry stalwart David Einhorn, who has a firm that invests in other hedge funds, helped Anand Desai launch his firm, Darsana Capital, in June after spending nine years investing in equities at Eton Park.

Einhorn, in a letter to investors, said Desai was "partnered with only a small group of investors." Desai raised $1.2 billion.

Another new face is Yen Liow, who left the Ziff Brothers family office to start Aravt Global, yet another equity shop.

Liow also raised $1.2 billion.

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