Paloma Partners Management Company is a Greenwich, Connecticut-based hedge fund firm. It manages a total of four hedge funds that have more than $17 billion under management. Paloma Partners has no other clients: There are no other types of funds at the firm, no high-net-worth individuals and no other institutional clients. There are 47 advisors working at the firm.
If you aren’t sure what the right investment strategy is for you, consider working with a financial advisor, who can guide you through your myriad options.
Paloma Partners Management Company Background
Paloma was founded in 1989 by Donald Sussman. Sussman serves as director of the firm along with Gregory Hayt. The firm is owned equally by Sussman, Hayt and 17 other senior employees.
Paloma is located in Greenwich, Connecticut. As of now, the firm only works with the hedge funds it manages, but it reserves the right to take on other clients including more private funds or separately managed accounts.
Founder Donald Sussman is well known to the general public for both his charitable donations and his involvement in Democratic Party politics. He has even served on the boards of liberal organizations like the Center for American Progress and the Democracy Alliance.
Paloma Partners Investment Philosophy
Advisors at Paloma Partners are open to all types of investments, including margin investments. The strategies used include:
- Credit relative value investment strategies: designed to find long and short opportunities in corporate, asset backed and mortgage backed securities.
- High yield strategies: trading and investing in credit derivatives, bank debt, bonds and equities of unrated or below investment grade issuers.
- Fixed income strategies: investing in long and short credit positions.
- Distressed strategies: investing in securities and other assets of issuers of weak financial condition
- Event driven strategies: investing in opportunities created by unexpected events and special situations.
- Statistical arbitrage and systemic futures strategies: using quantitative methods and statistical models to identify mispricings.
- Fundamental and directional strategies: measuring the intrinsic value of a security by analyzing economic and financial factors.
- Volatility and correlation strategies: trading derivatives.
- Capital structure strategies: exploiting pricing inefficiencies and information asymmetry.
- Convertible securities: exploiting price differentials between convertible securities and the underlying security.
- Long/short strategies: using both long and short positions in securities, indices, ETFs or baskets of securities
- Commodities strategies: trading commodities, futures, options or derivatives on agricultural products, energy products, metals, minerals and others.
- Activist strategies: investing with the purpose of influencing the management of a company.
- Private equity: medium to long-term investments in private companies that are not publicly traded.
- Investments in real assets: investing in physical, tangible assets including commodities, equipment, natural resources and property.
- Macro-economic strategies: seeking to capture market movements across a global universe of investment opportunities including equity, currency and commodities.
Largest Hedge Funds at Paloma Partners
Paloma International LP
Beneficial Owners: 5
Paloma International Limited
Minimum: $5 million
Beneficial Owners: 235
Paloma Partners LLC
Minimum: $5 million
Beneficial Owners: 507
Paloma Offshore Limited
Minimum: $5 million
Beneficial Owners: 79
Fees at Paloma Partners
Currently, there are no asset-based or performance based fees at Paloma. Instead, most of the expenses are passed-through and paid by the feeder funds and investors. These expenses include investment sourcing fees, research fees, due diligence expenses, brokerage fees, commissions and other possible fees.
Each feeder fund pays a management fee of 1.5% of assets under management (for Class A and B investors) and a performance-based of 20% of profits (for Class C and D investors).
Class B and D investors also pay either 0.25% of 0.50% of the relevant capital account balance as a liquidity capital account reduction.
What to Watch Out For
Hedge funds are highly complex and loosely regulated. They aren’t generally the best option for amateur investors -- in fact, you must be an accredited investor to invest in one.
That said, there are no disclosures on the record at Paloma.
Becoming a Client of Paloma Partners
To contact someone at Paloma Partners about the possibility of investing in one of the firm’s hedge funds, email email@example.com or call (203) 861-3236
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- If you do invest in hedge funds, don’t forget to budget for the capital gains tax that will likely come with any big monetary gains you make.