03/27/2009

Deutsche Alumni Pooling Buy-Side Capital

Seer Capital, the investment shop led by former Deutsche Bank structured-finance executives Phil Weingord and Richard D'Albert, is ready to launch its first hedge fund.

The New York firm hopes to get its Seer Capital Master Fund up and running in the coming weeks, using the vehicle to buy distressed asset-backed securities, residential and commercial mortgage bonds and whole loans. The plan is to raise $200 million to $400 million for the entity by tapping funds of funds, pension systems, foundations, endowments, family offices and wealthy individuals for equity contributions.

The fund won't use leverage to increase its buying power. Its investment strategy mirrors what Seer has been doing through separate accounts since Weingord started the firm last year. Those accounts now encompass about $200 million of client capital.

The decision to start with separate accounts partly reflects a recent preference by investors to have their money in stand-alone portfolios that they can access easily. Many of those players became wary of commingled funds when managers of such vehicles responded to credit-crisis pressures by blocking withdrawals and walling off illiquid holdings in so-called side pockets. They also feared getting stuck with unwanted assets amid heavy redemptions by shareholders more concerned with short-term results.

For its work on the new vehicle, Seer will charge typical hedge fund fees equal to 2% of assets and 20% of profits.

The firm is manned by a staff of 18 structured-product specialists. In addition to Weingord and D'Albert, who oversee investments together, they include: former Deutsche collateralized debt obligation underwriting chief Michael Lamont; securities- and index-trading head Tony Barkan, whose former employers include Clinton Group, Harbert Management and Sailfish Capital; ex-Deutsche analyst Richard Kim; and David O'Brien, who once analyzed mortgage bonds at Carlyle Group.

Weingord headed Deutsche's broad global-markets unit in North America until March 2008, when he left the investment bank to begin working on Seer. Lamont followed soon after. D'Albert, who supervised Lamont as Deutsche's global head of securitized products, came on board in September.

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