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First, is the general shift into more liquid strategies at the urging of cash-strapped institutions, a change that has been underway for some time at funds like Citadel Investment Group, Gottex, Tremont and other high-profile entities. Like these funds, Stark is moving away from the illiquid strategies that were once so ravenously consumed by investors. As The New York Times wrote Monday: Investors suddenly realized that they could not get access to the money they had put in or sell their investments for anywhere close to what they were worth on paper. Seemingly overnight, investors began to reassess the tradeoff between the promise of high returns that did not always materialize and limited access to their money. The second trend that the launch is emblematic of is the emergence of Asia-based funds. Bloomberg reported recently that Anthony Correa, who started Polygon Investment Partners LLP's Asian office, plans to open a Hong Kong-based hedge fund to invest in Asian mergers and rights offers. And on Oct. 5, Isometric Capital Management, owned and managed by Sanjiv Bhatia, the former head of Deephaven Capital Management's Asia office, launched in Hong Kong. For Stark's Edds and Wilson to start their own firm, and for Stark to move away from more illiquid investments, makes sense. However, the question that arises from all this is whether illiquid and liquid strategies will be able to co-exist in this new era of alternative investing. "I think we will be seeing a lot more separation [between the two strategies]," said one lawyer who specializes in hedge fund and private equity M&A. Either illiquid strategies will be spun out from larger, multistrategy funds, as was the case with Stark, or managers that want to separate their liquid and illiquid securities will create "side pockets" to ease the burden of redemption requests, he said. What is sure, though, is that even as demand for credit and other illiquid-type strategies is cooling, it still exists. Orchard is launching with $1.5 billion, $500 million of which is in client assets that are following Edds and Wilson to their new venture. - Sara Behunek
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