We love any story that begins with a hedge funder careening through the Californian desert on his bike and a casino that was once owned by Frank Sinatra.
That hedge funder is Joshua Friedman, the founder of the $19 billion hedge fund you probably didn’t know about: Canyon Partners.
Canyon just had a bumper year in 2010 with 11.5% returns on their $8.8 billion flagship fund, Canyon Value realisation, according to Bloomberg Markets Magazine, making it the 9th most profitable hedge fund in 2010.
The firm, which has 215 stafffers, was founded by Friedman and another former Drexel Burnham trader, Mitchell Julis, in 1990, pulled in returns from investments in troubled assets that included bank loans, junk bonds. mortgage-backed securities and aircraft leases.
Here are some fun facts about the firm and it’s chieftans:
- The are pretty private and appear seldom in public. When they do, it’s usually for local charity events and the annual Beverly Hills conference at the Milken Institute.
- Julis is “a voracious reader” who paid $25,250 for a first edition of Benjamin Graham’s “The Intelligent Investor” that was signed by Warren Buffett.
- In 2009, Canyon became embroiled in a lawsuit with Miami Vice star Don Johnson, who sued film library Rysher Entertainment Inc., which is majority owned by Canyon.
- Canyon hires outside consultants to do mock SEC audits every year.
- Julis became an observant Jew after the Canyon Value realisation Fund had its first negative year in 1998: “The market got shaken and I got shaken. I knew I needed something beyond my hedge fund to ground me. Torah was the answer.”
- Julis also co-wrote a song about Israel in response to Jimmy Carter’s book that compared its treatment of Palestinians to South Africa under apartheid.
- The art that’s hanging in the reception area of the firm’s office in L.A are black-and-white photos of rocky canyons that cost $50 each.
Both founders are Harvard law school and business school grads.
While Friedman began his career at Goldman Sachs in M&A, Julis was a bankruptcy attorney at Wachtell, Lipton, Rosen & Katz. Julis moved to Beverly Hills ’83, joined Drexel and eventually oversaw $500 million of distressed securities. Friedman soon followed and was in charge of structuring new issues.
A former Drexel colleague said,
[T]hey are especially talented at navigating the complexities of corporate debt. While Julis is skilled at basic research and financial analysis, Friedman is an expert on the pecking order of creditors in the event of a default or liquidation and how their claims can affect debt holders.
“Josh knows where the bodies are buried. It’s a very good partnership. They play off each other.”
Expertise plus a pit bull nature is clearly what has made Canyon one of the world’s most successful hedge funds. “Aggressiveness is part of their DNA,” a client said.
Canyon hasn’t been without stumbles – most of which have been connected to the the firm’s real-estate lending and investing operations (which is how they own the “ailing casino” in Lake Tahoe that was once owned by Frank Sinatra AND is where Marilyn Monroe spent one of her last days at the hotel before she died).