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Lioness Capital Seeks to Defy the Odds as Hedge Funds Struggle

Melissa Karsh
Lioness Capital Seeks to Defy the Odds as Hedge Funds Struggle

(Bloomberg) -- A one-time adviser to hedge funds is now getting in on the act, joining several women opening their own firms this year.

Asli Ay is starting a hedge fund focused on political and policy-related events after a career of providing insights on how government actions can impact investments.

“For the foreseeable future government policies in developed and large emerging markets will be the key determinant of value in a variety of sectors impacting a range of securities,” Ay said in an interview. “This is an inflection point policy-wise -- immigration, fiscal, trade, national security and regulatory policies are all changing.”

Hedge fund startups are facing a tough environment following lackluster industry performance and investor pressure on fees. Last year, launches -- which have been on a steady decline since 2012 -- fell to the lowest level since 2000, according to Hedge Fund Research.

Ay joins a small group of women trying to buck the odds. They include Leon Cooperman protege Rebecca Pacholder, whose Snowcat Capital Management is set to start next month, and Lauren Taylor Wolfe, who founded activist firm Impactive Capital after leaving Blue Harbour Group.

The current boom belies the fact that women comprise just 5% of hedge fund founders and 4% of chief investment officers, according to data from Preqin Ltd. They hold 29% of junior roles and just 11% of senior jobs, the data provider said in a February report.

Ay, former managing partner at financial sector research firm US Policy Metrics, plans to begin trading her Lioness Capital hedge fund next month. The fund will focus on policy and political events in G-20 markets with an emphasis on the U.S., she said.

Lioness, with offices in New York and Washington, will only take money from institutional investors and is expected to launch with seed capital, Ay said. She declined to provide the amount.

The firm is expected to have $85 million of assets under management by July, according to a Credit Suisse capital-raising document seen by Bloomberg. It will be two times levered and Ay will serve as chief investment officer.

The firm will focus on executive actions, legislative and regulatory changes and antitrust decisions. It won’t trade on monetary policy, such as interest rates or employment data.

At US Policy Metrics, Ay advised macroeconomic and event-driven hedge funds on legislation, regulation and other government decisions. Prior to that, she spent almost a decade at UBS Group AG.

Brian Reed, former chief operating officer of BTG Pactual’s global hedge fund division, will hold a similar role at Lioness. Nancy O’Flynn, formerly of Kingdon Capital Management, will be a senior trader and portfolio manager.

“No single investment theme can make up more than 15% of the portfolio regardless of the conviction we have on that trade,” Ay said. “When it comes to investment ideas, we don’t want to hunt alone, so to speak.”

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