James Pallotta's Raptor Capital Discloses Position in Primus Telecommunications (PMUG)

James Pallotta's hedge fund firm Raptor Capital Management just filed a 13G with the SEC in regards to shares of Primus Telecommunications Group (PMUG). Per the filing, Raptor has disclosed a 8.08% ownership stake in Primus with 787,600 shares due to portfolio activity on July 7th, 2010. Since this is an over the counter (OTC) traded security, we can't be sure if this is a brand new position for Raptor because they aren't required to disclose these positions in quarterly 13F filings. In their prior portfolio disclosure, Pallotta's hedge fund did not show a stake in PMUG. There is a chance this could be a brand new position for his firm, but there's no way to know for sure without Raptor directly confirming.

This stake becomes even more puzzling when you consider that Pallotta wound down Raptor back in June 2009. Even though he folded the firm to take time off to reformulate his investment strategy, his firm continued to report positions to the SEC (although the assets under management reported decreased significantly). This latest filing seems to imply Raptor has come back to life or is at least somewhat still active.

Pallotta originally founded Raptor as a spin-off from hedge fund Tudor Investment Corp where he previously managed the equities portfolio there. While at Tudor, Pallotta's Raptor investment vehicle saw 14% annualized returns since 1993. We'll continue to monitor the SEC filings to see if further signs of life at Raptor arise.

Taken from Google Finance, Primus Telecommunications Group is "an integrated facilities-based communications services provider offering a portfolio of international and domestic voice, wireless, Internet, voice over Internet protocol (VoIP), data and data center services to customers located primarily in the United States Australia, Canada, Brazil, United Kingdom and western Europe."

For more on Pallotta and his hedge fund, head to our previous coverage of Raptor Capital.

Raptor Capital's Pallotta Invests In New Hedge Fund

Well, it certainly didn't take long for James Pallotta of Raptor Capital to get back in the hedge fund game. While he's back, it's not quite in the role we thought it would be. Pallotta has decided to invest $10 million in new hedge fund Northern Pines Capital as a limited partner. When he wound hedge fund Raptor down, he noted that he would be taking time away to formulate a new investment strategy. While we expected him to be back in the industry after a brief hiatus, this is a little bit different. Instead of hedge fund manager, Pallotta is now an investor.

While he himself is not going to be managing this money, he certainly knows those who will well, as they used to report to him at Raptor. Former Raptor Capital and Tudor Investment Corp traders Patrick Dunn and Dan Schiff will be opening Northern Pines Capital and will be trading a long/short strategy in public equities, typically holding between 30 and 60 positions. Dunn will focus on the consumer sector while Schiff will focus on basic materials and energy. Hedge fund Tudor Investment Corp was out calling the recent market action a bear market rally and so it will be interesting to see how Northern Pines allocates their initial portfolio given the managers' history at both Tudor and Raptor.

They will be charging a 1.5% management fee and a 15% performance fee, a slight discount from the industry norm of 2% and 20%. But, Northern Pines' performance fee will hit 20% should their fund generate a gross annual return of 10%. And, unlike their former employer Tudor, Northern Pines is avoiding illiquid investments and won't 'gate' investors from making redemptions. You'll remember that Tudor made waves earlier in the crisis for suspending redemptions so they could separate their illiquid investments. The ties between Raptor and Tudor (and now Northern Pines) run deep as Pallotta used to run equities for Tudor then spun-off Raptor for his own hedge fund. Raptor ran $9 billion at its peak and returned over 13.8% a year from October 1st, 1993 until May 2009, net of fees.

Since we like to track hedge funds that spin-off of successful existing firms, we'll follow Northern Pines for a bit and see what we might be able to glean if we get a glimpse of their portfolio. As always, we'll post our findings up in our hedge fund portfolio tracking series. And while Pallotta isn't back in the hedge fund manager seat quite yet, we'll watch the developments there as well.

James Pallotta's Raptor Capital Cuts BigString (BSGC) Stake In Half (13G Filing)

James Pallotta's hedge fund Raptor Capital Management recently filed an amended 13G with regards to their position in BigString (BSGC). Shares of BSGC are traded over the counter and Raptor has disclosed a 3.35% ownership stake in the company with 2,006,780 shares. The amended filing was made due to activity on August 18th, 2009. This is way down from their previous ownership of 7.12% with 4,004,288 shares. So, they have sold over half of their position.

They had previously filed the original 13G back on January 1st, 2009 as Raptor as a firm was just getting started. Remember that James Pallotta used to head the equities team at Paul Tudor Jones' Tudor Investment Corp. Pallotta then spun-off Raptor as its own fund. However, back in June, we learned that Raptor would be winding down. For the rationale behind the move, Pallotta said, "I intend to step back from day-to-day investing for a few months to spend valuable time crafting an optimal investment strategy in order to capitalize fully on the next several years' developing investment opportunity set." We'll keep an eye out for Raptor's revival or possibly a new entity. You can view some of Raptor's prior holdings here.

Taken from Google Finance, BigString is "is a technology company focused on providing online communications. The Company provides a technology that would allow the user of e-mail services to have control, security and privacy relating to the e-mail generated by the user. In addition to its free e-mail service product, it offers e-mail services, products and applications, such as domain/vanity names, post office protocol version 3 (POP3) e-mail client access (a protocol used to retrieve e-mail from a mail server), advanced e-mail management and campaign management tools, which are offered in several different packages by the users of its BigString e-mail service."

James Pallotta's Hedge Fund Raptor Capital Winds Down

In quite an interesting development, James Pallotta's hedge fund Raptor Capital Management will shut down for the time being. Readers will be familiar with Raptor because we had just started tracking them in our hedge fund portfolio series. Unfortunately, their spot on our list will be vacated for the time being until they decide to return. Pallotta sent out a letter to investors where he suspended redemptions and said they will be winding down the funds as they return capital to investors starting in July. Pallotta said, "I intend to step back from day-to-day investing for a few months to spend valuable time crafting an optimal investment strategy in order to capitalize fully on the next several years' developing investment opportunity set."

So, while Pallotta may be closing shop for now, it does sound like he has intentions to return fresh and with a solid game plan. He continued, "Consistently, in recent years, I have conveyed my skepticism regarding the sustainability of certain aspects of the industry's structure and short term focus. (There is) a place for a model which aligns the interests of investors and managers toward the goal of truly-shared compounding of superior risk-adjusted returns over time." It sounds as if in addition to crafting a new investment strategy, that Pallotta is crafting a new fund structure as well. He wants investors to keep money in place for multiple years, a setup used in many private equity funds.

He must feel that this would allow him to make long-term investment decisions, rather than worrying about near-term performance. Additionally, he wouldn't have to worry as much about redemption requests, a fear that was realized in the hectic year of 2008 as investors demanded their money back. This will be interesting to monitor whenever he decides to return.

Additionally, we found it interesting to note that Pallotta will apparently provide seed capital to a few analysts who will be starting their own hedge funds, in a move similar to that of hedge fund legend Julian Robertson (who did so with the Tiger Cubs).

Raptor's funds were pretty much flat for the year through May in terms of performance, according to the letter. Our only look at Raptor's performance was included in our March hedge fund numbers, where we saw Raptor -1.34% for the year at that time. We began tracking Raptor because it was being spun-off from Paul Tudor Jones global macro fund Tudor Investment Corp. Pallotta was responsible for all of the solid performance in their equities fund (called Raptor there as well). Pallotta spun off the fund and we followed him due to his solid track record of returning 13.85% a year from 1993 until 2008 while at Tudor. Raptor managed $9 billion in its peak at Tudor and currently manages around $800 million. You can view some of Raptor's portfolio here.

Raptor joins the growing list of prominent hedge funds to shut down amid the crazy markets of 2008 and 2009. Just last week we detailed the closure of Art Samburg's hedge fund Pequot Capital. Overall, 2008 was definitely a bleak year in hedge fund land. A few other notable closures we've covered on the blog include Satellite Asset Management and Okumus Capital. (See the list of other 2008 closures here).

Here is James Pallotta's letter to Raptor investors (RSS & Email readers will need to come to the blog to view it):

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James Pallotta's Raptor Capital Management 13D & 13G Filings

This is the 4th Quarter 2008 edition of our ongoing hedge fund portfolio tracking series. Before reading this update, make sure you check out the Hedge Fund 13F filings preface.

Next up is James Pallotta's Raptor Capital Management. This update is slightly different than the majority of our 13F tracking posts simply because they haven't filed a 13F yet, as they are a newer fund. We've actually been tracking this development since back in August. However, they have filed a few 13D and 13G's back in mid January. So, we're going to go ahead and start coverage on them considering that we will be watching them going forward. We're tracking newly formed/spun-off Raptor simply because it is ran by James Pallotta, who previously ran Tudor Investment Corp's equity fund for many years. The fund was actually called the Raptor fund and as such, Pallotta has spun it off as his own fund and kept the name. So, in all the prior updates of Tudor Investment Corp's 13Fs, we were tracking Pallotta. We'll monitor Pallotta's Raptor now and then we'll continue to monitor Tudor's equity holdings as well.

Pallotta places global macro style bets on equities and is somewhat similar to a few other concentrated portfolio funds we follow. While at Tudor, Pallotta helped generate 14% annual returns ever since 1993. So, let's cover the developments thus far. All of the filings discussed below were filed on January 12th, 2009. In a 13D filed with the SEC, Raptor Capital Management has disclosed a 43.1% stake in Uni-Pixel (UNXL) with 17,343,760 shares beneficially owned. Additionally, they also filed a 13G, disclosing a 7.12% stake in BigString Corp (BSGC) with 4,004,288 shares beneficially owned. Lastly, they also show a 13G disclosing a 6% stake in Enherent Corp (ENHT) with 3,142,826 shares beneficially owned. All of the filings were made due to activity on January 1st, 2009.

We'll continue to monitor any filings and activity from Raptor from here on out as we bring them into the mix. This is just one of many funds in our hedge fund portfolio tracking series in which we're tracking 35+ prominent funds. We've already covered Paulson & Co (John Paulson), Carl Icahn, Warren Buffett, Stephen Mandel's Lone Pine Capital, George Soros, Bill Ackman's Pershing Square, Andreas Halvorsen's Viking Global, Timothy Barakett's Atticus Capital, David Einhorn's Greenlight Capital, Seth Klarman's Baupost Group, Peter Thiel's Clarium Capital, Bret Barakett's Tremblant Capital, and David Stemerman's Conatus Capital. Look for our updates as we will be covering a new fund each day.