Raffaele Costa eyes world domination with hedge fund

Self-styled 'Captain Magic', Raffaele Costa plans to resurrect the glory days of the hedge fund with his latest venture, Tyndaris.

"The glory days of the hedge fund launch may not be entirely over", says the Financial Times. Raffaele Costa, former partner at hedge fund GLG and self-styled "Captain Magic", has just unveiled the first fund at his new firm, Tyndaris "one of the boldest start-ups since 2008" (see below).

In recent years, alternative asset managers have eschewed the ostentatious launches of the pre-crisis industry. Not this one. Tyndaris has leased some of Mayfair's priciest offices on Savile Row, complete with a floor-to-ceiling "living wall" of plants, which will eventually form a map of the world. "Captain Magic", it would appear, is planning nothing less than global domination.

Costa, a Sicilian-born former Goldman Sachs banker, is about as far removed from the classic Goldman stereotype as you can get, says eFinancial- Careers.com. "Bankers there aren't known for their eccentricity or love of ostentation." Rather, a "conformist culture" is prized making Costa something of an anomaly among alumni.

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He glories in two personae. There's the red-hot hedgie who helped build GLG before its eventual subsumation into Man Group. And then there's Captain Magic', his masked, piratical alter ego, who comes out swash-buckling whenever he boards his mega-yacht, Sea Force One. Costa views Captain Magic as "a manifestation of his creativity"; he's so keen on the character he's planning a book and film about him.

Visitors to the yacht certainly tend to come away impressed. "The minute you arrive aboard, you're engulfed by a wave of emotions and contrasts," wrote an Italian contributor to Yacht Online in 2009. The vessel embodies "the innermost soul" of her owner. As Costa explained: "This boat is a bit like my mystery island, a ghost ship in which I can take refuge it's my most exciting adventure".

Despite his apparent love of showmanship, not much is on the record about Costa's early life. He left Goldman Sachs in 1995, says eFinancialCareers.com, and later joined the hedge fund GLG. There, fellow Goldmanite Manny Roman built the fund into a money-spewing machine home to star traders including Greg Coffey and the Belgian dynamo Pierre Lagrange.

Costa's expertise was sales and marketing, and when GLG sold out to Man Group for $1.6bn in 2010, in a move considered to be "the deal of the century" for GLG partners, he signed up for a key role, says Reuters. Within a year, he'd quit.

"I believe you can compartmentalise your life," says Costa although he maintains that "my creative side served me well in helping to build GLG to the powerhouse it was". But he may have lost the courage of his convictions in the drive to promote Tyndaris. A website devoted to Captain Magic's world on Sea Force One has, sadly, just been removed.

Is this the return of the good old days for hedgies?

It will come as no surprise to anyone who knows Raffaele Costa that his new firm has a decidedly nautical theme, says Sam Jones in the Financial Times. Tyndaris takes its name from a site in his native Sicily, the scene of a naval battle during the first Punic War. The firm's strategy seems to be a gradual deployment of firepower.

It has just begun marketing a commercial real-estate fund run by a Deutsche Bank expert, Heath Forusz, and former bankers from JPMorgan and Citigroup. A Middle-East-focused infrastructure fund is scheduled for later this year, and possibly a European hedge fund too.

It seems a good time to launch. The big beasts of the hedge-fund world have had a torrid few years, struggling to stem losses in difficult markets and facing the threat of massive redemptions, but it looks like there's a renaissance underway, says Chiara Albanese on InvestmentEurope.net. The Eurekahedge Hedge Fund Index was up 2.3% in January, its strongest January return since 2006, with funds across all regions posting positive returns.

Could Costa's more maverick side turn off investors? asks Sarah Butcher on eFinancialCareers.com. Hedge funds can certainly boast more "unique characters" than investment banks. But many believe there's no going back to the old ways. Institutional investors have become "less open to investing money with people who are seen as too eccentric", argues Nicola Ralston of investment consulting firm PiRho. But when you look at who's really making money, Captain Magic finds himself in good company, says Butcher.

Among the notoriously odd financiers is Ray Dalio, founder of the macro fund Bridgewater Associates, whose long list of "life principles" extends to inspecting the dental records of prospective employees. Eccentricity doesn't appear to have dented his success: "last year he was lauded as the most successful hedge-fund manager in history".