Firm Overview


KStone Partners LLC is a privately owned
alternative asset management company founded in 2008

Competitive Advantage

KStone’s Chief Investment Officer has a track record of managing alternative investment funds that generated attractive risk-adjusted investment performance for investors in portfolios of hedge funds.

Asset Allocation

KStone pursues an investment strategy that is premised on the benefits of diversification.

Risk Management

KStone’s principal focus is on risk management at the portfolio and investment manager levels. It controls volatility and protects against downside risk. KStone conducts in-depth structural risk analysis of high potential hedge portfolio managers.

KStone Partners LLC provides funds of hedge funds to high net worth and institutions investors. KStone seeks to produce an attractive risk adjusted return for its clients and constructs portfolios that have lower volatility, higher alpha and low correlation to equity and fixed income markets. KStone has the expertise to design and implement a customized account for an investor.

Investment Philosophy


KStone seeks to generate superior risk-adjusted returns in all economic environments

KStone seeks to generate absolute, above average risk-adjusted returns for institutions and high net worth individuals by constructing low volatility portfolios with low correlations to the equity and fixed income markets

KStone’s Portfolio are primarily invested with managers that have track records of generating superior risk-adjusted returns and have portfolios with assets less than $1 billion

KStone seeks to invest in portfolio managers that have marketable securities underlying their strategies as the Portfolios provide investors with quarterly liquidity

  • KStone attempts to avoid investing in managers pursuing illiquid strategies

Investment Process


The process starts with our investment philosophy and
includes four major stages

Research is Key
KStone’s extensive network of relationships, established over many years, in the credit-related arbitrage and relative value hedge fund community produces numerous investment opportunities

  • Manager research and screening process results in a list of potential investment opportunities, i.e., “Managers of Interest” that are reviewed by the CIO

Structural Risk Analysis

Thorough due diligence is completed for every investment

  • Structural Risk Analysis is conducted on an ongoing basis throughout the life of an investment

Risk Management

Traditional asset management tools are applied to alternative investing

  • KStone completes analysis at the manager and portfolio level

Portfolio Management

Portfolio construction is driven by top-down macroeconomic views coupled with bottom-up manager identification

  • Managers and portfolios are actively monitored
  • A “Watch List” is maintained for possible reallocations

Investment Highlights


KStone aims to deliver superior investment results for a given level of risk

KStone seeks to achieve returns that exceed the risk-free rate of return, with volatility similar to fixed income markets.

Historically, the portfolios that KStone manages have generated superior risk-adjusted returns. Generally, KStone’s portfolios are not dependent on the performance of the equity markets for returns.

KStone seeks to mitigate risk by having the sources of return be diverse and not correlated to interest rate movement.

KStone’s primary focus is on risk management at the portfolio and underlying manager levels and KStone seeks to control volatility and preserve investors’ capital.

KStone’s CIO has substantial and diversified business and investment experience.

Potential Benefits of Investing in
Funds of Hedge Funds


Potentially Better Risk-Adjusted Returns

May be able to generate alpha through manager selection, portfolio construction and active oversight

Volatility

Investors benefit from consistency and compounding rather than magnitude of returns

Price for Alternative Investment Products Benefits

Incremental fees are modest compared to substantial additional benefits to investors

Access

Enables investors to invest in hedge funds that they would otherwise not be able to access

Risk Reduction

  • Generally, funds of hedge funds have lower correlations to equity and fixed income markets than individual hedge funds
  • Non-directional hedge funds are a different asset class from traditional asset classes
  • Limits downside risk of an individual hedge fund blowup

Expertise, Due Diligence & Monitoring Requirements

  • Hedge funds are complex and require in-depth analysis and expertise
  • Substantial time commitment is required prior to investing and once invested

Diversification

  • Fund of hedge fund diversification likely more effective than investor just adding direct fund investments
  • Different hedge fund strategies work better at different times so having a diversified portfolio of strategies is desirable
  • Permits diversification that is not possible given high minimum investments for most hedge funds

Informational Advantage

Constant monitoring of markets and alternative strategies allows funds of hedge funds management to shift among strategies quickly and efficiently to take advantage of opportunities

KStone Partners’ Team


KStone has assembled a talented team with significant relevant experience

Joseph H. Marren

President, Chief Executive Officer, Chief Compliance Officer and  CIO KStone High Income Muni Fund LP and KStone Distressed Muni Fund LP

Mr. Marren worked for twenty three years in investment banking primarily as a Managing Director and Head of Business Development in the M&A departments at Sagent Advisors, Citigroup, Credit-Suisse and Donaldson, Lufkin & Jenrette. He specialized in identifying attractive investment opportunities.

Mr. Marren, an attorney, was an Adjunct Professor at NYU Stern School of Business and, recently, has been a guest lecturer at Fordham Law, Columbia Law and Columbia Business School.

He is the author of two books on mergers and acquisitions and has written a number of articles related to investing in hedge funds including “Investing in large managers: A proven path to failure.”

Joseph M. Marren

Vice President

Jeanette M. Martin

Director of Finance

Gerald Molinari

Chief Financial Officer

Joseph T. Drohan

Consultant  

Caroline Marren

Research Analyst