Black Diamonds Get Noticed

Chidem Kurdas

Investors are always on the look-out for the next great manager, though the top league of large hedge funds has not changed much in years and consists mostly of the same names. One firm that received attention from large investors last year was Dallas-based Carlson Capital, the manager of the Black Diamond group of hedge funds.

A major fund of funds put money into Double Black Diamond, a relative value and event arbitrage fund with a one-year lock-up.

Clint Carlson started the firm in 1993 and in 1997 launched Double Black Diamond, which came to be known for its solid long-term track record, including relatively strong performance in 2009. The firm expanded its investment staff during the crisis. How a manager did in 2008-2009 has become a touchstone for investors.

Some big trades have gone badly.  Earlier this month a Carlson portfolio manager, Vikas Lunia, wrote a letter to Information Services Group demanding changes to boost the stock. Carlson owns 9% of ISG, having bought the company starting at its IPO five years ago. Since then the value of the initial investment dropped 87%.

Carlson total assets across several strategies and funds was $6 billion as of early 2011, according to a post on SeekingAlpha.com.   Mr. Carlson’s expertise is risk arbitrage but the firm expanded into new strategies. HedgeFundAlert reported in November 2011 that a global macro fund was added to the Black Diamond group.

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