Citco Fund Services, one of the larger global hedge fund administrators with a big presence on Grand Cayman, did not suffer any casualties, but power and communications systems on the island remained inoperable, according to the firm's website. The firm is operating on systems running on remote sites.
Hedge fund-of-funds manager Pacific Alternative Asset Management Co., Irvine, Calif., has not experienced more than minor inconvenience resulting from the extensive damage to Grand Cayman's infrastructure, including loss of electricity, structural damage from wind and water and washed-out roads and communication systems.
PAAMCO's Cayman-registered hedge fund of funds, The Pacific Tradewinds Fund, is serviced by the Grand Cayman office of administrator RK Consulting (Cayman) Ltd., and there has been no interruption to service, although staff can only communicate with the outside world by e-mail or cell phones at this point, said Von Hughes, PAAMCO's director and head of account management. PAAMCO also invests with other Cayman-registered hedge funds and has not experienced problems accessing accounts. PAAMCO manages about $5.9 billion in hedge funds of funds.
Other hedge fund managers and fund-of-funds managers, including Arden Asset Management Inc., New York; New Market Capital Partners LLC, Philadelphia; and Focus Investment Group LLC, New York, reported a seamless transition by their Cayman-based service providers to backup systems off the island.
A message on the website of RK Consulting's parent company, Rothstein, Kass Co., said the company backed up all of the Cayman Islands account records to its Roseland, N.J., office at close of business on Sept. 10 and was fully operational at 9 a.m. Eastern time Sept. 13, with accounts running on backup systems at other company locations. The firm moved fairly recently to a modern building that withstood the hurricane so well that island police have been using it as a base while they struggle to maintain order, said Maury Carstine, vice president of RK Consulting in Roseland. Mr. Carstine said the firm's previous office was destroyed by the hurricane.
The company has been flying some of its Grand Cayman-based employees who lost homes and possessions to the United States so they can regroup and work temporarily from offices here, said Mr. Carstine.
While the disaster recovery plans worked well for most hedge fund administrators, Mr. Carstine wondered if the future of the Cayman Islands as the world's preferred hedge fund domicile could be in jeopardy.
"A good number of the skilled employees in the hedge fund administration are expatriates. You have to wonder if they got on a plane and went home to Scotland or Canada (before the storm), whether they are going to be willing to go back, especially if their homes and possessions were totally wiped out," Mr. Carstine said.
The institutional side of the money management business was spared a big impact when Ivan lashed the U.S. Gulf Coast and the eye of the hurricane came aground west of Pensacola, Fla., Sept. 16. The American coast was most heavily affected from Pensacola to Mobile, Ala., by wind, rain and storm surges, with extensive property damage and at least 28 deaths attributed to the hurricane or the tornadoes it caused.
The few money management companies located along the Gulf Coast are clustered in cities including New Orleans and Metairie, La., and Mobile. They — along with corporate and municipal pension funds, university endowments and non-profit foundations —dismissed staff early on Sept. 14 when the National Hurricane Center issued a hurricane watch for the area.
Callers to the $244 million Pensacola General Pension Retirement Fund, the $53 million City of Mobile Police & Firefighters' Retirement Plan, Orleans Capital Management Corp. and the $332 million City of New Orleans Employees Retirement System got recorded greetings announcing storm-related office closures, or the phones weren't answered at all.
Most residents of, and visitors to, the Big Easy did not trust the track of the storm and got out of town or never came at all. The International Foundation of Employee Benefit Plans canceled its 50th annual conference, which was to be held in New Orleans Sept. 17-22.
The only person encountered in phoning around to pension and money manager offices on the Gulf Coast before the storm hit was Steve Rueb, a trader at Dorsey & Co. Inc., New Orleans. He said the money manager's offices were closed but that he would "flip the switch" to move the firm's backup systems to Texas once he left the offices to catch a late flight to Texas on Sept. 14. Dorsey & Co. manages about $125 million internally and oversees investment of about $600 million.
As for the fate of his own home and the office, prior to the storm, Mr. Rueb said he was not too concerned, "unless we take a direct hit here in New Orleans. It's like a bowl with higher sides and a deep center. If that happens, you're going to find alligators, rats and snakes being washed into every building. We'll be sweeping snakes out the door when we get back in." Ultimately, New Orleans was spared, receiving only strong winds and light rain.