Ken Heebner to Launch Hedge Fund

Woo hoo. :) I thought it would just be a matter of time... I'm jealous!

• Kenneth Heebner, manager of the top-ranked U.S. stock mutual fund, is seeking as much as $5 billion for his first hedge fund.
• Heebner, who has worked in the mutual-fund business almost four decades, formed a private investment partnership in June called Wayfarer Capital LP, according to Aug. 14 regulatory filings. The size of the fund, which had raised $73 million from wealthy investors and institutions, may vary from the target, Wayfarer Capital said in the filings.
• A private fund would free Heebner from most regulatory oversight and allow him to buy or sell any assets, unlike mutual funds, which are more tightly controlled. Hedge funds also charge higher fees, including a cut of investment profits.
• ``He has wanted to do this for a long time,'' said Janine Hermsdorf, who retired in December as the head trader at Heebner's Boston-based Capital Growth Management LP after working with him for 27 years. ``This was just the time to go ahead.''
• Heebner's CGM Focus Fund had the best performance among diversified U.S. stock mutual funds this year through June 30, gaining 17 percent including dividends, compared with the 12 percent decline by the Standard & Poor's 500 Index, according to data compiled by Chicago-based Morningstar Inc. The fund has since fallen 29 percent, while the benchmark index is off 3.9 percent, illustrating the swings that often accompany Heebner's approach to stock-picking.
• The 67-year-old fund manager is known for making concentrated bets on the direction of market segments ranging from real estate to commodities.
• His strategy of seeking to capitalize on broad economic trends, known as macro investing, is in demand among institutions.
• Heebner's success -- Fortune magazine in May dubbed him ``America's hottest investor'' -- has brought an influx of cash. CGM Focus's assets more than tripled to $10.4 billion as of June 30 from $2.9 billion a year earlier.
• CGM Focus's volatility could be a sticking point for Heebner as he seeks investors for Wayfarer Capital, said Sandra Manzke, chief executive officer of Maxam Capital Management LLC, a Darien, Connecticut-based firm that selects hedge funds for clients.
• Another potential problem is that CGM Focus offers access to Heebner's expertise at a lower cost and with fewer restrictions than a hedge fund
• ``Obviously, he has had three or four years of very strong numbers,'' said Geoff Bobroff, a mutual-fund consultant in East Greenwich, Rhode Island, referring to Heebner. ``Why not take advantage of it?''

[May 28: Ken Heebner - America's Hottest Investor]