Sundheim Taps Ex-White House Economic Adviser for New Hedge Fund

(Bloomberg) -- Daniel Sundheim, whose new hedge fund will invest in stock and private equity deals, hired a former deputy White House economic adviser to help run it.

Jeremy Katz, who was a lieutenant to National Economic Council director Gary Cohn, joins Sundheim’s firm as president and chief operating officer, according to a letter to prospective investors seen by Bloomberg News. Sundheim also revealed details about his fund, scheduled to start in the third or fourth quarter, including that it will focus on a global equity long-short strategy and “opportunistically” invest in private equity.

"My goal is for D1 to become a world-class investment firm that combines the talent and operational excellence of a large, premier asset manager with the flexible mandate and long-term investment horizon of a family office," said Sundheim, who will be the sole portfolio manager. He has also hired experts to cover sectors that the fund will focus on including consumer, financial services, healthcare and technology.

Investment Strategy

Katz, 40, was deputy director of the White House National Economic Council and a deputy assistant to the president. He played a key role in President Donald Trump’s tax revamp and helped lead the selection process for the new Federal Reserve chair. He left the White House in recent weeks.

Prior to joining the Trump administration, he worked for five years at GCM Grosvenor, a firm that invests in hedge funds, private equity and other alternative investments.

Sundheim wrote that most of the new fund’s capital will be deployed in publicly traded stock with the portfolio likely holding about 20-to-30 long positions and a "somewhat greater" number of short positions.

Investors will have an opportunity to put as much as 35 percent of their capital in private equity. Those investments will be placed in a so-called side pocket and primarily consist of later-stage, non-controlling stakes in companies. Investors can also opt to have up to 15 percent of their capital in private equity.

A representative for Sundheim declined to comment.

New Hires

Sundheim, 40, also recruited five people for the firm’s investment team, including Michael Lean as director of research. Lean previously worked at CLSA and Nomura. By the start, Sundheim said he expects the firm to have 20 staffers on the investment team. Tony Fox, formerly at hedge fund firms Eton Park Capital Management and Magnetar Capital, will be chief financial officer. Amanda Hector will be general counsel and chief compliance officer.

Sundheim left Viking last year and the firm said in June it would return $8 billion to investors. He was the firm’s chief investment officer and spent 15 years there.

Sundheim said the fund won’t have a lock-up period and his family office will be the largest investor at the start. The fund will offer investors a choice of three fee structures. Clients can opt to pay more in management fees and less in performance fees, or vice versa. Fees also change depending on whether clients choose to invest 15 percent or 35 percent of assets in private equity.

The fund will primarily invest in North America, Western Europe, Japan and China, according to the letter. Sundheim said it will take big bets on stocks with the top 10 investments typically comprising a majority of the capital.

“We are not compelled by investments with 60/40 win/lose probabilities,” Sundheim wrote. “Historically, I have bought large stakes in many great businesses when others panicked and sold, and I am structuring D1 so that it can take advantage of similar opportunities in the future. One of my favorite Warren Buffett quotes, ‘When it’s raining gold, reach for a bucket, not a thimble,’ aptly summarizes this philosophy.”

Sundheim’s firm is called D1 Capital Partners, taking a page from Jeff Bezos whose motto at Amazon.com is "It’s always day one.”

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