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Gargoyle Hedged Value transition

David_Snowball
in Fund Discussions
Dear friends,

For what interest it holds, the Gargoyle Hedged Value fund has quietly moved from RiverPark to TCW. The prospectus for the TCW fund refers to RiverPark as "the predecessor fund." Same team, strategy and expenses, $75 million AUM, substantially higher minimum initial investment.

While it's been popular to grouch about the RiverPark Alternatives funds (which has always muddled me since two of the three are distinctly above average), you might note that Hedged Value transitioned three years ago from being a hedge fund. The composite hedge-mutual record earns it a five-star rating at Morningstar. The fund will earn a three-year rating at the end of this month; it's made about 14% annually since the conversion, finished in the top third each year and, on an absolute returns basis, is in the top 6% of long/short funds over the past three years.

I've got a call out to the managers to see what's transpired. I'll share as soon as I can.

As ever,

David

Comments

  • heezsafe
    edited April 2015
    @David_Snowball There are 2 Gargoyle Hedged Value funds:
    (1) the one @ the Gargoyle Asset Management
    http://gargoylegroup.com/gargoyle_hedged_value_master_fund_hedge_fund&pid=96
    (2) the one subadvised for RiverPark (still posted on the RP fund list today)
    http://www.riverparkfunds.com/Funds/GargoyleHedgedValue/Overview.aspx

    Obviously, if the TCW prospectus refers to RGHVX as the predecessor fund, then this cannot be a case of an additional subadvisory relationship having been born. Is there an "effective date" mentioned in the prospectus for when this change of affiliation will occur? Strange that there is no announcement on the RP website (that I can find as of this afternoon), that the subadvisory relationship with Gargoyle has been severed.... but stranger things have happened.
  • David_Snowball
    Here's all I've got so far: TCW Gargoyle Hedged Value (TFHIX/TFHVX).

    The identity section writes in the future tense but gives no effective date:
    The following performance information relates to the Institutional Class shares of the RiverPark/Gargoyle Hedged Value Fund, a series of RiverPark Funds Trust (the “Predecessor Fund”). The Predecessor Fund offered two classes of shares, Retail Class (RGHVX) and Institutional Class (RGHIX), which invested in the same portfolio of securities, but had different returns based on their respective expenses. Retail Class shares had lower returns than Institutional Class shares because of their higher expenses. Prior to the Fund’s commencement of business, the Predecessor Fund will reorganize into the Fund, a series of TCW Alternative Funds.
    The effective date of the prospectus filing is 4-10-2015.

    It might be an interesting conversation.

    More as soon as I have something to share,

    David
  • Vert
    FWIW, Scottrade still has it available under RiverPark. On an unrelated note, Morningstar shows RGHVX as almost entirely long as of 3/15.
  • David_Snowball
    Update #1: talked with Morty Schaja. The TCW fund is a shell. The RiverPark shareholders will likely receive a proxy asking if they'll approve reorganization of the RiverPark fund into the TCW one. If that goes forward and they approve, the change would likely occur mid-summer.

    Morty explains it mostly as a matter of marketing the fund: it combines two disparate strategies (quant relative value + options overlay) which has worked really well, but which is attractive only to folks already excited by both strategies, which is a small crowd. The notion is the TCW has a large enough sales force that they might help the fund become economically self-sufficient more quickly than a boutique shop could.

    Morningstar, by the way, has now given it as five-star rating based on its mutual fund record rather than relying on its previous structure.

    David
  • BenWPBenWP
    If I were still a shareholder, I'd want to know if the TCW fund will have high minimum amounts for additional purchases. But, I'm not…
  • Edmond
    UPDATE......

    I don't hold this fund (new ticker TFHVX), as I have never been impressed with the fund's performance on "down" stock market days --- it always struck me that the hedge benefit which fundholders were being asked to pay did not work -- at least not enough to justify my dollars.

    That said, if M* and Google-Finance trailing returns are to be believed, this fund is really SUCKING WIND since TCW took the reins. M* is reporting trailing 3-month returns for TFHVX of (4.08%) vs S&P +1.41%. IF those returns are correct, it would be a stunning indictment of the fund's new managers.

    I continue to maintain that most of the "alternative" products avail to retail investors are marketing gimmicks -- marketed to rationalize charging excessive E/Rs, and excessively complex in their strategy -- making them prone to execution errors and, ultimately inconsistent and disappointing returns.

    Comments? Any explanation for apparent stinker-performance since TCW took the reins?
  • [Deleted User]
    The user and all related content has been deleted.
  • heezsafe
    It's a done deal:
    https://www.tcw.com/Funds/TCW_Alternative_Funds/TCW_Gargoyle_Hedged_Value.aspx
    And if one wants the I share rate of 1.25%, one will need a cool $1M to open:
    https://www.tcw.com/~/media/Downloads/TCW_Alt_Funds/TCW-AltFundsPro.ashx
    Looks like the AUM for the fund is currently down to circa 75M.

    @Edmond Given what it invests in, probably more accurate to compare its returns to the Russell 1000. I have no idea why they've chosen the S&P500 as their bench. And, since they don't short stocks (just their call options), it seems off the mark to me that M* puts the fund in its L/S category. New arrangement kinda moves it off my watch list anyway, so I'm not gonna worry my head about it anymore.
  • David_Snowball
    Interesting development. TCW is launching 7 or 8 "alternatives" funds, including three from Gargoyle. There will be a snapshot in Funds in Registration. Of them, only Gargoyle Hedged Value is live yet.

    David
  • Edmond
    Monday, Aug 3, the S&P = (0.28%); TCHVX = (0.51%).

    I will ask again, WHERE IS THE HEDGING?
  • JunksterJunkster
    >>>I continue to maintain that most of the "alternative" products avail to retail investors are marketing gimmicks -- marketed to rationalize charging excessive E/Rs, and excessively complex in their strategy -- making them prone to execution errors and, ultimately inconsistent and disappointing returns.<<<

    Truer words were never spoken.
  • heezsafe
    edited August 2015
    image
    @David_Snowball Oh, I actually thought you were joking. Then, I went and looked it up--- you weren't joking! What a Fun House of Mirrors. Nevertheless, considering the chronic under-performance by most of TCW's stock equity MFs, perhaps TCW's newest control owner, The Carlyle Group, thinks TCW investors need a whole bunch of "alternatives.";)
  • Edmond
    Wed, 8/5/15...
    S&P + 0.31%; TCHVX (0.21%) (negative).

    The market goes down, Gargoyle loses money; the market goes up, Gargoyle also loses money.

    You gotta hand it to the new managers --- they are consistent...
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