Doug Lowey, a co-founder of $600 million credit shop Brownstone Asset Management, is leaving his role of co-portfolio manager at the firm he helped build in order to focus on his long-running brokerage firm.
Lowey will remain at Brownstone while the firm transitions to a new management structure, and his partnership stake in the firm will decrease over time. Brownstone has formed a new investment committee headed by co-founder Oren Cohen as head portfolio manager, Curt Schade as portfolio manager, and recent hire Ed Galanek as portfolio manager and trader. Galanek recently joined from hedge fund Tricadia Capital Management. He had worked for Cohen at Bear Stearns in 1999 and at Merrill Lynch after that. As part of the new arrangement, Cohen and Schade will own the controlling stakes in the firm. Brownstone declined to comment on the changes.
Lowey is leaving to work full time on Brownstone Investment Group, a brokerage firm he launched in 1998. The firm sells blocks of debt to regional brokers and does not do any direct business with hedge funds. Despite sharing a similar name, the brokerage has always been a totally separate company with no legal connection to Brownstone Asset Management. The firms had shared office space, but the brokerage firm is remaining in the New York firm’s old offices at 655 Third Avenue, while the hedge fund recently moved to new offices at 100 Park Avenue.
Lowey’s departure triggered a key man clause in Brownstone’s investor agreements but has not resulted in any redemptions. The firm has raised significant assets in the past year based on extremely strong performance. In 2009, Brownstone’s assets increased to about $600 million from $297 million at the beginning of the year.
The firm’s flagship Brownstone Partners Catalyst Fund, which launched in July 2004, boasts no down years or quarters and a net annualized return (offshore) through January of 9.53% with a Sharpe of 2.32. More significantly, the fund was up 7% in 2008 and 7.48% in 2009. The fund gained 1.13% in January. The firm notified investors in August 2009 that it would soften its redemption terms to require a one-year soft lockup (which had previously been a hard lockup) with monthly liquidity upon 45 days’ notice at the cost of a 3% penalty, though quarterly redemptions carry no penalty.
Before founding Brownstone Asset Management, Cohen was a principal at Trilogy Capital and had also been in charge of high-yield media and telecommunications research at Merrill Lynch. He also worked as a senior managing director at Bear Stearns. Lowey ran the high-yield dealer desk at Bear Stearns before leaving to set up his brokerage firm.
—Josh Friedlander