Mr. Hall said Clinton Group is ready for the challenge. He has trimmed staff to 120. About 30 people were laid off in early March; 20 left voluntarily since the end of October, Mr. Hall said.
Mr. Hall recently relinquished the functions of chief investment officer to Richard Cohen, who had been head of research and technology and created the firm's statistical arbitrage strategy. Mr. Cohen is heading up an effort started last summer to develop more rigorous risk management and capital allocation processes, Mr. Hall said, and that has started to pay off in better returns.
The firm's $850 million Multi-Strategy Fund was up 4.8% year-to-date through April 30, for example; it returned an annualized 11.07% through April 30 from its inception in February 2001.
Mr. Hall said the returns of his firm's six relative value hedge funds "were exceptional over the past 12 years," except for last year, when returns were poorer in the latter part of last year because of high redemption rates.
Also, the firm's well-known $1.2 billion Trinity Fund, which suffered losses of 21.5% in 2003, has been closed to new investors while the fund's management implements new investment guidelines. The guidelines broaden investment possibilities for portfolio managers beyond the previous restriction to mortgage-backed securities. The firm is evaluating whether it should reopen the fund to new investors.
A chief operating officer's job also was created, held by Michael Vacca. He continues to oversee Clinton Group's convertible arbitrage and event-driven strategies.
There are nine marketers — an unusually high number for a hedge fund company — headed by Patrick O'Meara, director of marketing and client relations, whose job it is to "get out in front of investors," Mr. Hall said.
"I don't know (of) any other firm of our size that has gone through this level of scrutiny. Having gone through it, I think, adds an element of strength," Mr. Hall said.
Mr. Hall noted that the capacity constraints of many hedge fund-of-funds companies, whose underlying hedge fund managers are capping their asset pools, also may attract assets to Clinton Group. Since the firm at its peak last June managed $5.7 billion, the infrastructure remains robust enough to service at least $5 billion, Mr. Hall said.