Following the liquidation of New Castle Funds, co-founder Robert Reitzes and principal Scott Merves have re-surfaced to form BroadArch Capital. The firm recently launched long/short equity fund and a market neutral fund.
According to an e-mail from BroadArch, both of its funds will take on the same research approach used at New Castle, which also focused on long/short equity and market neutral strategies. Calls to BroadArch were referred to an external spokesman who declined to comment.
New Castle Funds managed $1.1 billion in January 2009 but liquidated its four funds later that year after being ensnared in the Galleon Group insider trading case. New Castle’s co-founder and chief executive Mark Kurland and consultant/portfolio manager Danielle Chiesi were among those charged as part of the case against Galleon founder Raj Rajaratnam. Despite assurances from the firm to its investors that New Castle had severed all ties to Kurland and Chiesi, New Castle later ceased operations (see: Record number of hedge funds liquidate in 2009).
New Castle’s funds posted solid returns over the past five years. Its flagship New Castle Partners, a long/short fundamental research strategy, annualized 12.97%. Perhaps more impressive are the firm’s returns during the meltdown of 2008; New Castle Partners dropped only 0.44%, while New Castle Millennium II, also a U.S. equity strategy, was the firm’s worst performer that year, but declined only 1.51%.
New Castle was launched within Bear Stearns Asset Management in 1995. Kurland was serving as Bear Stearns’ director of global equity research, while Reitzes was previously co-director of research for securities firm C.J. Lawrence from 1991 through 1994. Merves joined in 2002 from Glenview Capital Management, where he had been a senior equity analyst.
—Suzy Kenly