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Davidson Kempner Capital Management Review

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Davidson Kempner Capital Management

Davidson Kempner Capital Management LP is a Delaware-based, fee-only firm offering global investment management services. The financial advisor has more than $34 billion in assets under management (AUM). 

The firm does not serve individual clients. If you are looking for a financial advisor for an individual account, consider finding one with SmartAsset’s free financial advisor matching service.

Davidson Kempner Capital Management Background

Founded in 1983, Davidson Kempner has provided investment management services to private investment funds and unaffiliated investors for more than 30 years. The firm became a registered investment advisor (RIA) under the SEC in 1990, and it began serving unaffiliated investors in 1987.

While the firm has offices in New York and Philadelphia, it also has affiliates in Hong Kong, London and Dublin. The firm’s Hong Kong affiliate, Davidson Kempner Asia Limited, was established in 2010, while its U.K. affiliate, Davidson Kempner European Partners, LLP, began its operations in 2004. Davidson Kempner Ireland DAC, the Irish affiliate, was founded in 2017.

What Types of Clients Does Davidson Kempner Capital Management Accept?

The firm provides investment advisory services to private funds, or pooled investment vehicles. These vehicles are organized as either limited partnerships, domestic limited partnerships or offshore corporations. The firm’s proprietary funds, which make up its Onshore Employee Fund and its Offshore Employee Fund, include the firm’s managing members and certain former managing members, such members’ immediate families and trusts or other entities for their benefit and certain eligible employees. 

Davidson Kempner’s funds also include the Multi-Strategy Funds, the Distressed Funds, the Long-Term Funds and the Special Opportunities Funds. For such funds, investors may classify as some or all of the following: individuals, investment companies, banks or thrift institutions; trusts, estates or charitable organizations; pension and profit sharing plans, corporations or other business entities; certain eligible employees or affiliates of the firm.

Davidson Kempner Capital Management Minimum Account Sizes

The firm generally requires investors to make a minimum investment of $2 million to $5 million for the Multi-Strategy Funds, the Distressed Funds, the Long-Term Funds and the Special Opportunities Funds. The firm also mandates that investors in such funds have “accredited investor” status.

Services Offered by Davidson Kempner Capital Management

  • Investment strategies
    • Distressed Investing
    • Merger and acquisition investments/risk arbitrage
    • Long/short equities
    • Convertible and voluntary arbitrage
    • Long/short credit
  • Investment management
  • Portfolio guidance

Investment Philosophy

Along with its top priorities of risk management and preservation of capital, Davidson Kempner also believes strongly in using capital only in the top risk-adjusted investment opportunities. The firm also utilizes several investment strategies, including distressed investing, mergers/acquisition investing, investing in long/short equities portfolios of securities, investing in convertible and volatility arbitrage and corporate high-yield and investment-grade bond investing. 

For each of the previously listed investing strategies, the firm has risk committees that oversee the risk management of each strategy.

Fees Under Davidson Kempner Capital Management

Davidson Kempner doesn’t provide a fee schedule, but the firm does list the annual management fees and expenses associated with each fund. For the Multi Strategy Fund or Distressed Fund, clients encounter an annual rate of 1% to 1.75% of net assets. The fees for such funds are payable in advance on a monthly or quarterly basis. 

For the Long Term Fund, the management fee comes at an annual rate of 1.5% of contributed or committed capital of the fund. Clients may encounter an annual rate of 0.5% to 0.75% of net assets or contributed capital for the Special Opportunities Fund. The fees for both funds are payable in advance on a quarterly basis. Additionally, fees are generally non-negotiable, but the firm retains the discretion to reduce, waive or adjust the management fees according to a number of factors. The firm may do so for investors that are affiliates, partners or former partners, employees, members of the immediate families of such individuals or trusts or other entities for their benefit.

It’s also important to note that the management fees don’t include transaction fees, brokerage commissions or other expenses the client may incur. Each private fund has its own expenses for which clients will be responsible. 

The firm also charges performance-based fees. For the Multi Strategy Funds and Distressed Funds, clients will pay 20% of net realized and unrealized capital appreciation for each year. Clients will encounter a performance compensation, in the form of carried interest, of 20% of the net capital appreciation upon realization for the Long Term Fund. Performance compensation for the Special Opportunities Fund is also in the form of carried interest, but clients will pay up to 15% of the net capital appreciation upon realization.

What to Watch Out For

Potential investors should note that the firm retains full discretionary authority over the investment decisions, or trading, made on behalf of the client’s account. You should also be aware that Davidson Kempner may provide management to clients with conflicting programs or investment strategies.

The firm also has one regulatory action-related violation, which we’ll look into below.

Also remember that Davidson Kempner is not a financial advisor for individuals. For that, use SmartAsset’s free financial advisor matching service to find an advisor in your area.

Disclosures

Davidson Kempner does have a disclosure which involved one of its affiliates, Davidson Kempner European Partners, LLP. In 2015, the Swedish Financial Supervisory Authority (SFSA) alleged that the firm filed a notification of the exit of a net short position after the deadline specified by the European Union regulation on short selling. The firm settled the case with a $11,450 fine. 

Opening an Account With Davidson Kempner Capital Management

If you’d like to open an account with Davidson Kempner, you can stop by any of the company’s physical locations in New York, Philadelphia, Hong Kong, London or Dublin. You can also speak with an advisor or set up an appointment by calling the firm’s New York office at (212) 446-4000.

Where is Davidson Kempner Capital Management Located?

Davidson Kempner is headquartered in New York, New York at 520 Madison Avenue. The firm also has an office in Philadelphia near Center City, and it has offices in Hong Kong, London and Dublin.

Tips for Finding a Financial Advisor

  • When looking for a financial advisor, it’s important to identify your short- and long-term savings goals, as well as the areas where you’re specifically looking to improve your finances. Whether it’s estate planning or tax planning you need assistance with, determining your specific needs will ease the process of finding a suitable advisor.
  • If you’re having trouble finding the ideal advisor, SmartAsset’s financial advisor matching tool could be useful. All you’ll need to do is complete a short questionnaire about your financial situation, and the tool will pair you with up to three local advisors suitable to your needs. 

All information was accurate as of the writing of this article.

How Many Years $1 Million Lasts in Retirement

SmartAsset's interactive map highlights places where $1 million will last the longest in retirement. Zoom between states and the national map to see the top spots in each region. Also, scroll over any city to learn about the cost of living in retirement for that location.

Least
Most
Rank City Housing Expenses Food Expenses Healthcare Expenses Utilities Expenses Transportation Expenses

Methodology To determine how long a $1 million nest egg would cover retirement costs in cities across America, we analyzed data on average expenditures for seniors, cost of living and investment returns.

First, we looked at data from the Bureau of Labor Statistics (BLS) on the average annual expenditures of seniors. We then applied cost of living data from the Council for Community and Economic Research to adjust those national average spending levels based on the costs of each expense category (housing, food, healthcare, utilities, transportation and other) in each city. Using this data, SmartAsset calculated the average cost of living for retirees in the largest U.S. cities.

We assumed the $1 million would grow at a real return (interest minus inflation) of 2%. This reflects the typical return on a conservative investment portfolio. Then, we divided $1 million by the sum of each of those annual numbers to determine how long $1 million would cover retirement expenses in each of the cities in our study. Cities where $1 million lasted the longest ranked the highest in the study.

Sources: Bureau of Labor Statistics (BLS), Council for Community and Economic Research