Joel Salomon, a former director at Citigroup Inc., plans to start long-short equity hedge fund SaLaurMor Capital LP this month.
Salomon, 48, left Citigroup in January 2012, where he ran a financial-stock portfolio valued at $700 million at its peak in 2011 within the equity principal strategies unit, he said last month in a telephone interview. Citigroup said in October 2011 it was closing the group as regulators prepared to restrict banks from using their own money to wager on securities and markets.
SaLaurMor, named for Salomon’s two daughters, Lauren and Morgan, will be based in New York and start with a focus on small- and mid-cap financial stocks such as insurance companies and asset managers, Salomon said, and it may eventually trade in the credit offinancial firms. The firm, SaLaurMor Management LLC, will trade in North American, European and Asian markets.
“Europe clearly has much cheaper valuations than the U.S. but the macro headwinds are much more significant there,” Salomon said. “We found that there’s substantial value in a fair number of European insurance companies. If you look at dark-cloud scenarios, there’s downside in Europe as well.”
$700 Million
Salomon is fundraising and hopes to attract about $700 million, he said. If the fund ultimately invests in credit, the capacity may increase.
Salomon joined Citigroup in 2008 and started under two managers reporting to Sutesh Sharma, who resigned in 2011 to found the hedge fund Portman Square Capital LLP. Sharma’s team managed about $2 billion.
Traders have been leaving banks to start or join hedge funds after U.S. lawmakers approved the Dodd-Frank Act in 2010. The law, which includes the bank restrictions advocated by former Federal Reserve Chairman Paul A. Volcker, increased oversight of Wall Street in response to the worst economic slump since the Great Depression. While the rule doesn’t go into effect until 2014, Wall Street firms have begun to comply.
Danielle Romero-Apsilos, a spokeswoman for Citigroup, declined to comment.
SaLaurMor will probably start with three other employees, Salomon said, including a senior analyst he has chosen whom he declined to identify, another analyst yet to be picked and an executive to lead the firm’s operations.
Insurance Stocks
Long-short funds such as SaLaurMor can bet on or against stocks.
The fund will have an average holding period of 12 to 24 months for stocks, Salomon said. He sees opportunity in undervalued and overvalued companies and in those that are little affected by interest rates or regulation, such as requirements for banks to hold higher levels of capital.
“We’re looking at companies that are not subject to that kind of regulation, like reinsurance companies, and we’re looking at fee-based companies, like insurance brokers,” he said. “Even in years like 2012, there are some companies down 30 to 50 percent and others up 50 percent or more.”
Before Citigroup, Salomon was vice president and senior analyst at FSI Group LLC. Prior to that, he was a senior credit risk manager at Swiss Re AG. He started his career as an associate actuary at New York Life Insurance Co. and an analyst with Moody’s Corp.
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