Farallon Capital Explained

Farallon Capital Management
Type:Limited partnership
Industry:Hedge fund
Founder:Tom Steyer
Location City:One Maritime Plaza
San Francisco, California[1]
Location Country:U.S.
Area Served:Worldwide
Key People:Andrew J.M. Spokes (Managing Partner)
Aum:US$ 39 billion
(as of September 30, 2022)[2]
Num Employees:230+ (2021)[3]

Farallon Capital Management, L.L.C. is an American multi-strategy hedge fund headquartered in San Francisco, California. Founded by Tom Steyer in 1986,[4] the firm employs approximately 230 professionals in eight countries around the world.

Farallon primarily manages capital for university endowments, foundations, and high-net-worth individuals. The company manages assets reportedly worth $39 billion.[5]

History

Farallon was founded by Tom Steyer in January 1986 with $15 million in seed capital.[6] Before starting Farallon, Steyer had worked for San Francisco-based private equity firm Hellman & Friedman, as a risk arbitrage trader under Robert Rubin at Goldman Sachs, and in Morgan Stanley's corporate mergers and acquisitions department.[7]

Farallon was one of the first hedge funds to raise money from a university endowment. In 1987, Steyer, who received his bachelor's degree from Yale, approached the university's endowment to allocate funds for Farallon to manage. The Yale endowment declined based on the fees charged by Farallon. David Swensen, Yale's chief investment officer, later arranged with Tom Steyer that Farallon would initially manage an allocation of the Yale endowment for no fee.[8] After Yale's investment proved to be lucrative, many other college endowments and pensions began to invest in hedge funds.

Investment strategy

Farallon claims to have pioneered absolute return investing, a model focusing on potential returns as well as risk adjusted returns.[9] Farallon invests in various asset classes including value investments, credit investments, merger arbitrage, real estate related investments, and direct investments in both developed and emerging markets.[10] As of 2005, Farallon reportedly holds positions anywhere from two to five years.

According to Institutional Investor's Alpha, Steyer considers "himself as a research-oriented fundamental investor, not a trader."

Farallon also practices "event driven" international investing, finding distressed international companies and helping the businesses restructure.[11] [12] [13] In 1999, Farallon bought a direct stake in an Argentine shoe company, which helped stabilize profitability as Argentina recovered from an economic crisis.[14]

In 2002, Farallon bought control of Bank Central Asia (BCA), an Indonesian financial institution, for $531 million.[15] At the time, many of Indonesia's banks were on the verge of collapse because of bad loans made during President Suharto's term and the country was seen as dangerous for foreign investment. Farallon sold its stake for a profit in 2006.[16]

In the year before Farallon's investment in Indonesia, $286 million flowed into the country as foreign direct investment. After Farallon exited, that number grew to $1 billion in 2007 and $4 billion in 2008.[17]

In March 2010, Farallon announced plans to refocus its investing on risk arbitrage and credit wagers and lessen its equity exposure. In addition, the firm said it would disclose more information to clients to "foster a more open culture at the hedge fund."[18]

Investment history

In 2007, Farallon in partnership with Simon Property Group and other hedge funds purchased Mills Corp, a real estate investment trust.[19]

The fund is one of the largest shareholders in Japanese electronics company Toshiba, with a stake of more than 6 percent.[20] Farallon is also one of the top-10 shareholders in Acceleron Pharma.[21]

Company

In 2006, it was reported that Farallon Capital was the largest hedge fund in the world in 2005.[22] Steyer named the firm after the Farallon Islands off the coast of the San Francisco Bay Area.

Structure

Andrew J.M. Spokes acts as the firm's Managing Partner. Spokes was promoted to the position in 2012 when Steyer separated from the firm.[23] [24] Prior to his promotion, Spokes oversaw portfolio management and strategy for Farallon exclusive subadviser Noonday Global Management.[25] Spokes opened Farallon's first international office in London in 1998.

Today, Farallon has 21 principals, 13 managing directors, and 35 investment professionals who oversee the firm's day-to-day operations and management.

Offices

Farallon operates offices in San Francisco, São Paulo, Tokyo, Singapore, London, Hong Kong.

See also

Notes and References

  1. Book: Adam Zoia. Aaron Finkel. Getting a job in hedge funds: an inside look at how funds hire. 31 July 2011. 28 January 2008. John Wiley and Sons. 978-0-470-22648-3. 2–.
  2. News: Farallon Homepage. 13 October 2022. Farallon Capital. Homepage. Farallon Capital. 13 October 2022. United States. en. limited.
  3. Web site: Farallon Website.
  4. News: Lashinsky . Adam . California's hedge fund king . 23 July 2010 . Fortune . 17 September 2008 . dead . https://web.archive.org/web/20110131153809/https://money.cnn.com/2008/09/17/news/newsmakers/lashinsky_steyer.fortune/index2.htm . 31 January 2011 .
  5. Web site: FARALLON CAPITAL MANAGEMENT, L.L.C. Website . 2022-10-13 . www.faralloncapital.com.
  6. News: Adamson. Loch. Steyer Power. 19 August 2010. Institutional Investor. 23 February 2005. https://web.archive.org/web/20120903035648/http://www.institutionalinvestor.com/Popups/PrintArticle.aspx?ArticleID=1024622. 3 September 2012. dead.
  7. Web site: Robinson. Edward. 9 July 2019. Tom Steyer Made $3 Billion in Markets, Now Wants Crack at Trump. 2020-08-21. Bloomberg.
  8. News: For Yale's Money Man, a Higher Calling. 2010-07-26 . Fabrikant. Geraldine . 2007-02-18. The New York Times .
  9. Web site: Lashinsky. Adam. 22 September 2008. Hedge fund VIP Thomas Steyer of Farallon hates to lose money - Sep. 22, 2008. 2020-08-21. CNN.
  10. News: Keoun. Bradley. 21 March 2007. Farallon Discloses Takeover Talks With Accredited. Bloomberg. dead. 31 July 2011. https://web.archive.org/web/20121106041843/https://www.bloomberg.com/apps/news?pid=newsarchive&sid=aaqky2g.ADqM&refer=home. 6 November 2012.
  11. Web site: Saltwell. Hollie. M&A Plays the Trump card: making event driven hedge fund investing great again?. 2021-06-06. Aurum. en-GB.
  12. Web site: Asset Manager Profiles. 2021-06-06. studylib.net. en.
  13. Web site: Andrew Spokes, the New Face of Farallon. 2021-06-06. Institutional Investor. en-gb.
  14. Web site: Today's fund is a pioneer in the hedge fund sector, Uniform Accounting shows the fund hasn't lost its touch. 2021-06-06. Valens Research. en-US.
  15. Web site: McMillan. Alex. 20 March 2002. CNN.com - 'Masters of the universe' behind BCA sale - March 20, 2002. 2020-08-21. CNN.
  16. News: Or. Amy. 2009-06-29. Farallon Sells Its Entire Stake in Indonesia Bank. en-US. Wall Street Journal. 2020-08-21. 0099-9660.
  17. Book: Mallaby, Sebastian . More Money Than God . 2010 . Penguin Press . More Money Than God .
  18. News: Farallon Plans Shake-Up, Report Says. 2010-07-26 . Sorkin. Andrew . 2010-03-12. The New York Times.
  19. Book: Stephen Todd Walker. Wave Theory for Alternative Investments: Riding the Wave with Hedge Funds, Commodities, and Venture Capital . 2 August 2011. 7 January 2011. McGraw-Hill Professional. 978-0-07-174286-3. 365–. Stephen Todd Walker.
  20. News: 2022-03-11 . Major Toshiba shareholder Farallon calls on it to solicit buy-out offers . en . Reuters . 2022-05-06.
  21. News: 2021-11-02 . Farallon Capital Opposes Terms of Merck's Acceleron Takeover . en . Bloomberg.com . 2022-05-06.
  22. News: Goldman Sachs Leads Hedge Fund Management Rankings . 6 August 2011 . Wall Street Letter . 26 June 2006 .
  23. News: Farallon's Steyer to Step Down as Spokes Named Manager. Kishan. Saijel. 2012-10-22. Bloomberg. 2018-11-15.
  24. News: Farallon Capital's Founder to Step Down This Year. Lattman. Michael J. de la Merced and Peter . DealBook . The New York Times . 22 October 2012 . 2018-11-16. en.
  25. Web site: Farallon Names Spokes Co-Managing Partner with Steyer. 2010-07-26 . Strasburg. Jenny . Bloomberg.