“Hot Pocket” Founders To Launch Equity Fund

01-29-2010 | Source: Alternative Investment News

From the makers of the “hot meal in a pocket” comes a consumer-focused equity hedge fund. Falcon Investment Management, the hedge fund arm of the Merage family office, founders of Chef America which invented Hot Pockets, has launched a long/short equity hedge fund on Jan. 1. Portfolio Manager Richard Merage oversees the Falcon Consumer Fund, a long/short strategy which currently manages $119 million of the Merage’s wealth.

This is the first time the family will open the consumer strategy to outside investment. “What they found over the last couple of years is they had a specific expertise in the consumer space given the family’s background, network, research process and knowledge,” said COO Christopher Ainsworth.

Falcon Consumer invests in small-, mid-, and large-cap consumer stocks primarily in the U.S. It typically holds 60 positions, 30 long and 30 short. Falcon Consumer began trading in late 2007. The strategy dropped about 3% in 2008, but gained approximately 20% in 2009.

Falcon has $454 million under management, managing the consumer fund, a $230 million fund of hedge funds, and a $105 million quantitative trading fund. The fund of funds and quant fund are not open to outside investors.

Portfolio manager Richard Merage’s father Paul and uncle David co-founded Chef America in 1975. They sold Chef America to Nestlé in 2002 for $2.6 billion. Richard then founded Falcon with the backing of his family.