Element Capital Management Explained

Element Capital Management LLC
Founder:Jeffrey Talpins
Location:New York City, New York, U.S.
Aum:US$ 8.5 billion (January 2024)
Products:Hedge fund

Element Capital Management is an American hedge fund using a global macroeconomic investment strategy,[1] founded in 2005[2] by Jeffrey Talpins.

Company overview

Element Capital is headquartered in New York City.[3] In 2015, the company opened an office in Mayfair, London.[4]

In April 2017, Harvard University became a client of Element Capital,[5] an early decision by the endowment’s then-new chief, N.P. “Narv” Narvekar. [6] Other investors included the John D. and Catherine T. MacArthur Foundation, the Teachers Retirement System of Texas, and the Alaska Permanent Fund.[7]

The fund is almost always closed to new investments in order to remain an optimal size. The last time the fund opened to new capital was in mid-2018. It attracted $3 billion, mostly from existing clients, in just one month.[8]

In December 2018 The Wall Street Journal reported the fund had quietly become a “heavyweight,” managing $50 billion+.[9]

In January 2020, in order to continue prioritizing performance over asset-gathering, the fund proactively reduced its AUM by 20%.[10]

In early 2021, Element Capital returned about $2 billion of 2020 profits to its clients in order to maintain control of the growth of the fund, focusing on performance rather than accumulating assets.[11]

In February 2024, Element Capital returned more capital to its investors stating it will continue to downsize in order to focus more on performance.[12]

Investment strategy

The fund uses a global macroeconomic strategy, trading based on political and economic trends, rather than the fundamental analysis of individual companies. Talpins uses options to try to capture growth from strategies aimed at predicting global economic shifts while also limiting potential losses from those strategies.[13]

Performance

Since launching in 2005 the fund averaged 21% annual returns, as of March 2019, with no down years.[14] [15] During the global financial crises of 2008, the fund returned 35%, and in 2009 it gained 79%.[16]

Key people

Jeffrey Talpins is the founder of Element and its chief investment officer since the fund launched in April 2005.[17]

In 2012, Adam Prestandrea joined Element Capital, stepping down as co-head of investments at Arpad Busson’s EIM SA.[18]

In October 2019, the company hired Colin Teichholtz, former Blue Mountain Capital fixed-income head, to research macro investment strategies and policy developments as part of the portfolio team.[19]

In September 2021, Element hired former member of the Bank of England's rate-setting Monetary Policy Committee, Gertjan Vlieghe, as its chief economist.[20]

Notes and References

  1. Web site: Harvard Piles Into Hedge Funds as New Chief Overhauls Endowment. McDonald. Michael. 6 May 2019. www.bloomberg.com. live. https://web.archive.org/web/20190507032240/https://www.bloomberg.com/news/articles/2019-05-06/harvard-piles-into-hedge-funds-as-new-chief-overhauls-endowment . 2019-05-07 . 2020-04-22.
  2. Web site: Uhlfelder . Eric . Global macro funds are having a stellar 2018 . Financial News . 5 November 2018.
  3. Web site: Element Capital Management LLC: Private Company Information - Bloomberg. www.bloomberg.com. 6 February 2017.
  4. Web site: Cardno. Alex. Element Capital expands with London operations HFM Week. HFMWeek. 7 September 2016.
  5. Web site: McDonald. Michael. 6 June 2017. Harvard Ditches Hedge Fund Run by Harvard Grad. live. https://web.archive.org/web/20170606111523/https://www.bloomberg.com/news/articles/2017-06-06/harvard-man-mindich-loses-out-in-endowment-hedge-fund-overhaul . 2017-06-06 . 2020-05-03. www.bloomberg.com.
  6. Web site: McDonald. Michael. 6 May 2019. Harvard Piles Into Hedge Funds as New Chief Overhauls Endowment. live. https://web.archive.org/web/20190507032240/https://www.bloomberg.com/news/articles/2019-05-06/harvard-piles-into-hedge-funds-as-new-chief-overhauls-endowment . 2019-05-07 . 2020-05-03. www.bloomberg.com.
  7. Web site: Kruppa. Miles. 2018-12-10. Decoding Element. 2020-05-03. Absolute Return. en-US.
  8. Web site: Burton. Katherine. 6 August 2018. Element Is Raising $3 Billion as Hedge Fund Returns 21%. live. https://web.archive.org/web/20180807141850/https://www.bloomberg.com/news/articles/2018-08-06/element-is-said-to-raise-3-billion-as-hedge-fund-returns-21 . 2018-08-07 . 2020-05-03. www.bloomberg.com.
  9. Web site: Zuckerman. Gregory. Levy. Rachael. Jeffrey Talpins Is the Hedge-Fund King You've Never Heard Of. 11 December 2018. WSJ.
  10. Web site: Robin. Wigglesworth. 29 July 2019. Hedge fund Element Capital to raise performance fees to 40%. live. https://web.archive.org/web/20190730114526/https://www.ft.com/content/7435c1ce-b1f1-11e9-8cb2-799a3a8cf37b . 2019-07-30 . 2020-06-29. www.ft.com. Element also plans to reduce the size of its fund by 20 per cent by the end of 2019..
  11. News: Fletcher. Laurence. 2021-01-08. Hedge fund Element to return $2bn after profiting in pandemic. Financial Times. 2021-09-29.
  12. Web site: Kumar . Nishant . February 15, 2024 . Hedge Fund Element Aims to Run Mostly Internal Cash in Fresh Downsizing . 2024-02-16 . www.bloomberg.com.
  13. News: Levy. Gregory Zuckerman and Rachael. 2018-12-02. Jeffrey Talpins Is the Hedge-Fund King You've Never Heard Of. en-US. Wall Street Journal. 2020-05-13. 0099-9660.
  14. Web site: Vardi. Nathan. The Hedge Fund Manager Who Bucked The Trend And Became A Billionaire. 2020-06-29. Forbes. en.
  15. News: Levy. Gregory Zuckerman and Rachael. 2018-12-02. Jeffrey Talpins Is the Hedge-Fund King You've Never Heard Of. en-US. Wall Street Journal. 2020-05-03. 0099-9660.
  16. News: Zuckerman. Carolyn Cui and Gregory. 2015-09-08. An Obscure Hedge Fund Is Buying Tens of Billions of Dollars of U.S. Treasurys. en-US. Wall Street Journal. 2020-06-29. 0099-9660.
  17. News: Levy. Gregory Zuckerman and Rachael. Jeffrey Talpins Is the Hedge-Fund King You've Never Heard Of. 2018-12-02. Wall Street Journal. 2020-04-22. en-US. 0099-9660.
  18. Web site: Westbrook. Jesse. EIM's Prestandrea Is Said to Join Hedge Fund Element Capital. Bloomberg. 7 September 2016.
  19. Web site: Element Capital Hires BlueMountain Fixed-Income Head. 2021-09-29. Institutional Investor. en-gb.
  20. News: Fletcher. Laurence. 2021-09-20. Hedge fund Element hires former MPC member Gertjan Vlieghe. Financial Times. 2021-09-29.

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