About Eddie Perlman

Investors today may bemoan ” the death of alpha”, but, for the ten years ending in 2011, Edward Perlman and his team at Greenwich, Connecticut-based Scottwood Capital Management were able to deliver the alpha-generated returns so coveted in the hedge fund industry. Today, Mr. Perlman is trying to replicate that performance in his namesake single family office fund that opened December 1, 2012. That fund is managed in-house and invests on its own behalf, not in other hedge funds.

Employing the same event-driven strategy as in the predecessor hedge fund, the Perlman Family Office has delivered returns that have topped the gains of the S&P 500 index and the majority of hedge funds. In its first year of 2013, the fund was up 34.34%. In 2014, it was up 19.62% and in 2015 the fund was up 3.06%. The result was an 18.31% net annualized gain from inception. The firm is highly tax efficient, as portfolio turnover is minimal, and investment costs and expenses are kept extremely low. The family office reports its results to all the major fund tracking and data gathering firms in the industry. The Perlman Family Office fund is included in the HFR index. As of January 1, 2016, the fund was 100% in cash and closed to new investors.

Brief History

From December 2001 until mid-2011 when he closed Scottwood, Mr. Perlman outperformed the markets and his peers during very volatile times with roughly 12% net annualized returns. Stocks were flat for that period and hedge funds returned 6% annualized. In an investor-friendly action rarely seen in the hedge fund industry, Mr. Perlman decided to return his clients’ money before what he anticipated to be  an imminent meltdown in the financial markets in late 2011. He was right and the firm’s investors were thankful.

Those investors, in hindsight, weren’t all that surprised. Many claimed that such an emphasis on fair dealings with them and on capital preservation were entirely consistent with Scottwood’s actions in the past. Other investors said that Mr. Perlman and his Scottwood team always placed investors’ interests first, and that returning capital was just an expression of the alignment of investors’ interests with those of the firm.

However, like with all asset managers, it was always performance that counted the most. Working with an excellent team of analysts and traders, Mr. Perlman was able to deliver the high quality returns sought by institutional investors. He did so with a contrarian approach that incorporated investing long and short, in both debt and equity instruments, and across many asset classes. The fund employed almost no leverage and, unlike most hedge fund managers, Mr. Perlman was happy to hold large amounts of cash when opportunities were scarce or market conditions were poor.

Having already converted the Scottwood fund into almost 100% cash, Edward Perlman in July 2011 announced he would immediately return all of the firm’s capital to investors. The timing could not have been better for everyone, as losses from the Euro debt crisis were avoided for Scottwood’s investors. Today, Mr. Perlman manages only private capital in his family office. Since his announcement, some of the worlds’ most prominent money managers have followed in the same path and converted their hedge funds into single family offices.