Magnetar Financial, LLC, also known as Magnetar Capital, is a hedge fund with more than $22 billion in assets under management (AUM) spanning across 83 funds, also called pooled investment vehicles. The firm is heaquartered in Evanston, Illinois, home of Northwestern University and just north of Chicago.
Magnetar Financial has a robust team of nearly 80 financial advisors that work on its funds. The firm conducts discretionary and non-discretionary management in its funds, investing in fixed-income, energy, quantitative, event-driven strategies and other investments.
Accredited investors are the only ones who can invest in hedge funds. If you don't qualify as an accredited investor, instead consider working with a local financial advisor.
Magnetar Financial Background
Magnetar was founded in 2005, the same year it registered as an investment advisor with the SEC. Magnetar Financial is known for its heavy involvement in collateralized debt obligations (CDOs) prior to the global financial crisis of 2008. While the firm itself profited from the crisis thanks to its hedged strategies, the CDOs it helped to create caused huge losses on Wall Street.
Magnetar Capital Partners LP is the sole member of Magnetar Financial. LL Nova Investments, LLC is the principal owner of Magnetar Capital Partners LP, and Alec Litowitz is the owner of LL Nova Investments. Litowitz is also the firm's CEO, and Ross Laser is president. Laser and Litowitz are also Magnetar's founders. The firm has secondary offices in Texas, as well as an office in London.
Magnetar Financial Investment Philosophy
Magnetar invests heavily in the fixed-income and energy sectors. Its strategies tend to be event-driven, combining that with quantitative analysis to drive growth in its funds. While these are the focal points of the firm's strategies and certainly what it's known for, it may also utilize other methods of analysis. Some funds may focus on one specific strategy, whereas other funds may diversify and spread across multiple strategies. You can request more information about a specific fund from the firm.
Funds tend to take both long and short positions. They also invest in a wide range of asset classes, from individual securities to other funds, private investments and alternative investments. The firm may use leverage and short selling to drive growth in their funds. The firm states that it isn't limited when it comes to the types of instruments, markets or jurisdictions in which it can invest. Magnetar lists a multitude of different strategies, which they may use individually or in concert with one another.
Largest Hedge Funds Managed by Magnetar Financial
- AUM: $2,463,895,336
- Minimum: $0
- Beneficial Owners: 51
- AUM: $2,091,213,702
- Minimum: $100,000
- Beneficial Owners: 51
- AUM: $1,903,745,839
- Minimum: $0
- Beneficial Owners: 105
- AUM: $1,298,553,662
- Minimum: $1,000,000
- Beneficial Owners: 11
- AUM: $1,164,259,650
- Minimum: $0
- Beneficial Owners: 85
Fees at Magnetar Financial
Magnetar states in its ADV brochure that it omits its fee schedule because it reserves the schedule for its qualified clients, or purchasers. Management fees are generally charged to the funds on a monthly basis, based on a percentage of a fund's total market value.
Incentive fees, also known as performance-based fees, are usually paid annually. Other fees may include operating expenses, such as consulting fees and transaction costs, internal operating expenses, organizational expenses and transaction costs.
What to Watch Out For
It's important to remember that only accredited investors can invest in hedge funds. In order to be considered an accredited investor, you must have at least $200,000 of earned income ($300,000 for couples) over the course of the past two years, along with a reasonable assumption that that trend will continue for the current year. Another route to becoming an accredited investor is if you have at least a $1 million net worth (minus the value of your primary residence), either on your own or with a spouse.
There are no legal or regulatory disclosures present on Magnetar Financial's SEC-filed Form ADV.
Becoming a Client Of Magnetar Financial
Remember that only accredited investors can work with hedge funds like Magnetar Financial. If you think you meet the requirements and want to work with the firm or its funds, get in touch for more information. You can reach the firm by phone at (847) 905-4400.
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