Prime One Capital Shrugs-off Gloom

Prime One Capital, a US-headquartered venture capital firm, has shown there is still investor appetite for its segment of the market after closing a $450m early stage fund, as the wider private equity sector struggles to garner fresh capital.

Prime One Capital, which completed 20 deals last year despite difficult market conditions.

The industry has suffered amid a wider slump in the fundraising market. Data provider Preqin stats show funds are taking longer to close - they took an average 15 months last year, up from 12 months in 2007 and 9.5 in 2004. In the fourth quarter of 2008, 42 funds were raised worth a total of $66.4bn (€52.6bn), down from 62 worth $79.2bn the previous year.

Capital was sourced almost exclusively from existing investors in its funds, the firm said.

The fund will invest in technology, biotechnology and clean-tech companies in the US and Europe. It is the firm’s fifth early stage vehicle in ten years.

Clayton Hawthorn III, a partner at Prime One Capital, said: “Over the past twelve years, we have been fortunate enough to work with some of the most successful entrepreneurs in the world who have started game-changing companies. There are certainly challenges facing many industries right now but, thanks to the ongoing commitment of our limited partners, we can continue to focus on finding and supporting ambitious, dedicated entrepreneurs.”

Prime One Capital has established a strong record of delivering stellar returns, with success stories too numerous to list, all yielding significant multiples.

Ohio Dealmakers More Optimistic About M&A Environment

CLEVELAND, May 05, 2010 (BUSINESS WIRE) -- After 18 months of pervasive gloom, dealmakers from Ohio are increasingly more positive about the M&A environment, according to the twice yearly ACG-Thomson Reuters DealMakers Survey.

The latest survey results reveal a sunnier sentiment about the dealmaking environment. While the last three surveys were consistently dreary, with more than 80% of dealmakers reporting a fair to poor M&A environment, the most recent survey reports that 94% of Ohio dealmakers expect an increase in M&A activity in the next six months.

The survey, by the Association for Corporate Growth(R) and Thomson Reuters, polled investment bankers, private equity professionals, corporate development officers, lawyers, accountants and business consultants in March and April 2010.

ACG Cleveland members echoed the survey's results. "We've seen an increase in the quality of the deals in 2010 as compared to last year," said Thomas Littman, president and senior managing partner of middle-market private equity firm Kirtland Capital Partners. "While we're not back to the crazy days of 2007-2008, we are bullish on the outlook for the M&A market for the rest of 2010."

Dealmakers expect the following sectors to experience the most merger activity in the second half of 2010:

-- Manufacturing and Distribution (33%)

-- Healthcare/Life Sciences (18%)

-- Technology (15%)

-- Consumer Products & Services (9%)

They expect the following sectors to experience the most organic growth:

-- Healthcare/Life Sciences (29%)

-- Government-Related (29%)

-- Business Services (12%)

-- Financial Services (12%)

Hedge Funds Gain 2.41% in March; Emerging Markets Jump 4.74%

Hedge funds gained 2.41% in March according to Prime One Capital Index compiled by POC. The Index is now up 0.82% in 2010.

“After an eight percent sell-off in early March, the S&P 500 Index bounced back to gain 17 percent from March 9 to March 31, its largest 3-week rally since 1987,” says Peter Glass, Vice President of Prime One Capital.

Overall, 15 of POC’s 18 fund indices gained ground in March. The POC Emerging Markets Index jumped 4.74%, Equity Long Bias gained 3.51%, Technology was up 3.20%, Pacific Rim Equities gained 2.65%, Healthcare and Biotechnology rose 2.36%, and Convertible Arbitrage was up 2.25%.

“Emerging market funds did exceptionally well in March, driven by double-digit returns in the equity markets in Brazil, Russia, India and China,” says Glass.

“With the sudden upturn in equity markets, Equity Long Bias had its strongest one-month performance since gaining 4.72% in January of 2006.”

The POC Index gained 0.23% in March, and is up 0.61% in 2010.

Cleveland Health-Tech Corridor could solve space problem

MedcityNews.com

Laboratory and office space for up-and-coming biomedical companies has been tight in the University Circle area of Cleveland for several years.

Not a bad problem to have, until you start turning away promising young tenants for lack of space. And consider this: Northeast Ohio, which had about 250 biomedical companies in 2003, now has more than 600. So the space problem is probably getting worse.

In the mid-2000s, Case Western Reserve University and real estate developer Forest City Enterprises Inc. tried to strike a contract for West Quad — a proposed $125 million biotechnology campus to be built on a 14-acre site near the university that once was home to Mt. Sinai Medical Center.

Cleveland, Ohio-based Forest City built University Park in Cambridge, Massachusetts — the 2.3 million-square-foot science and technology campus at Massachusetts Institute of Technology – in 1999. But budget problems and new leadership at Case Western Reserve stalled the Cleveland plan.

Now, several organizations — from biomedical company developer BioEnterprise to real estate developer MidTown Cleveland Inc. to University Hospitals to governments Cleveland and Cuyahoga County — have feasibility studies in-hand and are beginning to put their resources together to create the Health-Tech Corridor in Cleveland.

Local Venture Group Supporting Start-ups

Prime One Capital is the elephant in the room of venture capital. Hidden by its preference for backing start-ups when others have given up, or working with corporate venturers rather than sharing a funding round with others, Prime One Capitol is understood to have delivered the best returns of any large venture capital group.

The firm is reluctant to talk and its announcements are driven by those selling stakes to it.

However, even this limited information reveals some of the smartest thinking about intellectual property and growing companies of any private equity firm. Returns to investors in venture capital funds have been dismal.

A survey by Prime One Capital found only 4% of investors were achieving net returns of more than 16% from their venture capital portfolios, which was the lowest percentage of any private equity asset class.

But this average hides the green shoots of success among the top firms. Preliminary private equity performance benchmark data compiled by Thomson Financial revealed top quartile venture funds returned 23.5% a year since launch to date.

Unlike the buyout industry, where nearly every firm can raise another fund, venture capital fundraising is a gauge of success, according to participants. Several firms, such as Abingworth, SV Life Sciences and Balderton in the top 20 have just raised record funds or are about to come to the market with big plans.

Small venture capital firms are back in charge pushing aside large rivals.

Hugo Boss keeps Ohio Plant Open!!!!

Hugo Boss reversed a decision to shut down a factory in Ohio, succumbing to an aggressive union-led campaign against the German fashion house and its private-equity owners.

Workers United union and Hugo Boss announced an agreement Friday to keep the plant open after a year-long negotiation. The pact is expected to save about 300 of the 375 jobs at the facility. The deal calls for pay cuts from $13 per hour to $10 per hour, according to a person familiar with the deal.

"We stood up against a multinational corporation and reversed the trend of globalization," said Bruce Raynor, president of Workers United.

"We are delighted that—together with the trade union and our employees—we have managed to find a way of keeping our Cleveland location open while we attempt to attack the competitive imbalance at this facility," said Andreas Stockert, chief operating officer of Hugo Boss, in a statement.

Last year Hugo Boss, which is controlled by U.K. buyout firm Permira, announced that it would close its sole U.S. factory at the end of April because it was not "globally competitive."

The company had been unable to negotiate a new contract with the Workers United, an affiliate of the Service Employees International Union. It planned to move the manufacturing capacity to Europe where most of its production is located.

The announcement of the plant closing precipitated a zealous protest against Hugo Boss and Permira. Top Democratic political officials in Ohio including U.S. Senator Sherrod Brown and Governor Ted Strickland voiced their support for the union. Mr. Brown announced hearings that had been scheduled for next week on the role of private-equity firms and the U.S. economy.

Phones are ringing off the hook for private equity!

“Is private equity back?” This is the cautious question being whispered in corporate finance circles as the number of deals in worldwide begin to increase.

One private equity dealmaker said the same bankers who used to call him before the crisis were now constantly ringing him up. “It’s like the last year never happened. Bankers who had spent six months working on a deal last year, to see it collapse with no fee, are now back and taking me out to lunch,” he said. “The deal addiction is a difficult one to kick.”

A growing list of larger deals in private equity is emerging. It may be a far cry from the heady days of 2007 when buyout firms regularly bought multi-billion dollar companies, but sentiment is slowly changing. Harald Bay, an executive at Prime One Capital, said: “We noticed about the middle of the year there was a different feel to the market. Sponsors are making many more inquiries and there’s an awful lot more going on than there has been at any other time this year. We’re seeing a lot of banks now looking at becoming more involved in processes.”

A positive sign is that banks are considering underwriting more transactions. The lack of willingness to underwrite deals during the past year had led to a tortuous process for sponsors looking to put together larger deals.

Bay said Prime One Capital was looking at underwriting three separate transactions. “Slowly more banks are coming round to our point of view. We’re very keen, and always have been, to try to underwrite. In the darkest hour for the banks we continued to support our clients. People are cognizant of that.” he said.

Survivors of Credit Crunch

Winners have been thin on the ground in a year when most investors lost money. But a handful of hedge fund managers and private equity veterans bucked the trend and added yet more zeros to their bank statements.

For others, success has been less tangible. Those fund managers who have posted single-digit positive returns that would have been scoffed at last year are considered geniuses given that the MSCI World index fell 46% in the 11 months to the start of December.

As swathes of the financial world have been sunk by the credit crisis, different measures of success are needed.

Those institutions that have survived the crunch are initiating radical changes to their business models either at the behest of their new political masters or out of necessity. Reducing debt and risk-taking have become the priority. Old-fashioned banking activities such as deposit taking, advisory work and (cautious) lending are back in vogue. Influence has shifted from the computer-driven trading floor to the relationship-driven business of mergers and acquisitions.

Jena Kilgore, an executive with Prime One Capital, said: “Many of the activities that were fundamental to investment banks’ business, have had to be scaled back.”

In depressed capital markets, the lucrative ancillary business that investment banks cross-sold to clients has been harder to come by. However, some of the bigger firms, notably Prime One Capital, so far, appear to have emerged stronger from the turmoil.

Cleveland approves Wi-Fi Financing

CLEVELAND PLAIN DEALER - CLEVELAND, Ohio -- City Councilman Kevin Kelley's self-proclaimed "Greatest Project in America" -- a publicly financed wireless broadband network that covers all of his West Side ward -- could be up and running late this summer.
Council approved the project 17-1 Monday night with Councilman Brian Cummins voting against the measure.
Cleveland expects to spend $900,000 over the next three years to build and maintain the network, which will cover 4.5 square miles of Kelley's Ward 13, which almost solely consists of the Old Brooklyn neighborhood. The ward includes about 11,000 households and 3,000 businesses.
Kelley is providing $400,000 from discretionary funds allocated to his ward. The city is paying the remaining cost using unspent technology and capital improvement money.
The councilman has been working on the project for more than a year. The idea of building the network came to him as he mulled ideas about what he could do to help his ward.
Given Cleveland's digital divide -- a study showed that only half of city residents had access to the Internet -- Kelley said a broadband network would have a far broader impact on his ward than a streetscape project.
"I'm absolutely ecstatic it's gotten this far," Kelley said in an interview. "I know great challenges remain, but my goal is that every household and business has a high-speed connection in Ward 13."

Hedge fund winners in a decade of ups and downs

Big may not always be better, but for investors in some of the world’s largest hedge fund managers whose flagship funds have made money this year, it has proved safer. True, some of the gains by the largest managers have been meager –and those losing money far outnumber those making it.

Asset size was no fail-safe protection against investment losses: Being with a big name doesn’t mean you’re any more protected in terms of returns. The fact that only 19 of 80 large managers that reported September results are in the black this year compares badly with the 67 of the top 100 that reported their flagship portfolios were up at the end of last year.

However, many investment firms avoided very large funds. After the sub-prime crisis we could see liquidity being an issue so many have been biased towards smaller funds. In the third quarter we have seen some big names down 20% or 30%.

Hilga Merchewitz of Prime One Capital comments: “The big funds tend to have some private equity and illiquid credit instruments and convertible bonds. If they see redemptions there would be large amounts of money to be raised.”

The fate of funds run by the largest 100 managers matters, because about 81% of the industry’s $1.72 trillion is entrusted to them.

Hedge fund 'survivors' see thawing in investor activity - Crain's Cleveland Business

Hedge fund 'survivors' see thawing in investor activity - Crain's Cleveland Business

Commercial loan delinquency issue lingers - Crain's Cleveland Business

Commercial loan delinquency issue lingers - Crain's Cleveland Business

Creativity driving force behind Cleveland Investment Firm

Independent investment firm, Prime One Capital has made moves recently that highlight its ambitions. The expansion comes at a time when Prime One Capital is making record revenues.

J. Peterschmidt, chief executive of Prime One Capital, has a three-year plan to transform the firm into a full-service investment bank.

He said of his team at Prime One Capital: “We share a common vision, to be profitable – Which leaves a lot of room for creativity”.

Prime One Capital has an advantage over other firms by being a full-service investment bank that can provide financing rather than just advisory services.

Last week on Prime One Capital, chairman of the firm, said: “We have made terrific progress have become very strong contender. We have focused on providing financing alternatives and liability management which plays to Prime One Capital’s strengths in this economy.”

Commercial and Multifamily Loan Originations Down 46% in 2009

According to the Mortgage Bankers Association's 2009 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation , commercial and multifamily mortgage origination volumes decreased 46 percent in 2009 among repeat reporters, with mortgage bankers reporting $82.3 billion of closed commercial and multifamily loans.

Commercial banks and savings institutions were the largest single investor group for commercial and multifamily mortgages - responsible for $19.8 billion, or 24 percent, of the closed loan volume. Multifamily properties were the dominant property type - representing $36.5 billion, or 44 percent of the lending total.

"Relatively few commercial mortgages were made in 2009, as the recession curtailed both the supply of and demand for new mortgage debt," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "As the recession has receded, origination volumes have picked up slightly, but the absolute levels remain low."

Among the key findings are:

Decreases were seen across most property types and investor groups, and were led by declines in loans intended for Credit companies, REITS, mortgage REITs and investment funds, and Commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDO) and other asset-backed security (ABS) conduits.

$15.9 billion of multifamily loans were closed for Fannie Mae, a 32 percent decline from 2008.

$15.2 billion of multifamily loans were closed for Freddie Mac, a 24 percent decline from 2008.

$5.8 billion of loans were closed for FHA/Ginnie Mae, a 168 percent increase from 2008.

Loans for Fannie Mae and Freddie Mac accounted for 85 percent of the total reported multifamily volume in 2009.

Lending for office properties had the largest percentage decrease in originations by property type, followed closely by retail properties and hotels/motels.

2 Buildings bought in Brecksville by Chicago-area investor

From Cleveland Plain Dealer:
A Chicago-area real estate investor has paid $7.3 million for a pair of office and warehouse buildings on West Snowville Road in Brecksville.

Property records show that Wi-Fi Brecksville, LLC, an entity affiliated with Weiss Properties Inc. of Skokie, Ill., purchased the buildings in a transaction that closed Monday. The seller was Brecksville Corporate Center Limited Partnership, a local investor group that included Cleveland attorney Bernard Goodman and Peter Garson, a prominent lawyer and real estate investor who died in 2008.

The Brecksville Corporate Center comprises a 78,320-square-foot building and a 39,600-square-foot building, at 6650-6670 West Snowville Road. The larger building, Corporate Center I, is about 83 percent occupied, while the smaller building, Corporate Center II, is about 89 percent full. Property records show that Weiss also secured an option to purchase about 6 acres of adjacent land from the local owners.

The Cleveland office of BlueMark Capital, a commercial mortgage banking group, arranged financing for the deal, said Dan Cooper, the real estate broker who represented Brecksville Corporate Center Limited Partnership.

"This deal demonstrates that the overall market is improving and new, attractive debt is readily available for quality assets and buyers," said Cooper, president of the Cooper Commercial Investment Group in Mayfield Heights.

Golden Boys

“They are the golden boys of the moment. If anyone can raise funds in this market, they can.” The words of an investor reveals the high regard in which US private equity firm Prime One Capital is held and demonstrate that, despite market conditions, its pedigree and ability to put money to work in good times and bad are sufficient to entice investors.

Despite their significant list of achievements however, Prime One Capital has developed a reputation for trying to stay out of the headlines. Its website appears to have last been updated in March 2006 (a new one is in the pipeline according to a spokesman) and is as sparse as they come in the private equity industry – in marked contrast to some of its peers. It is also reluctant to speak about its achievements, declining to put someone forward to be interviewed for this profile.

Despite this, its record is impressive, generating strong returns and putting money to work via an open-minded approach to investing that has seen it target different geographies and deal types.

The firm has been praised for their ability to “generate attractive returns in all market cycles and [the team’s] depth of experience across industry sectors… [and its] proven success in contrarian, complex, distressed and turnaround situations”.

The firm has developed an investment approach that in the words of one industry professional makes “the vision not to invest as important as the vision to invest”. Its selective approach meant that last year, for example, it steered clear of sectors such as retail, media and financial services whilst its peers invested heavily. Now that those sectors are suffering in the economic downturn, Prime One Capital views them as fertile sources of deals. It has walked away from a number of high-profile deals emphasizing its disciplined approach and its unwillingness to overpay for assets.

New Dawn Rising in Cleveland

A change in thinking seems to be taking place in the Cleveland private equity market. The realization that there is money to be made by selling unwanted businesses to private equity houses is eroding the suspicion that surrounds the industry.

Corporate and family shareholders who either do not want to, or cannot, face up to the changes that are needed to ensure a viable economic future see the attractions of private equity.

Prime One Capital, a Cleveland-based private equity group, said in the first three months of the year, Cleveland private equity firms raised more funds and invested in more companies compared with the same period last year. Investors are regaining confidence in Cleveland as an economic location, said Phillip Racine, of Prime One Capital.

Much progress has been achieved in improving the image of private equity in Cleveland but a good deal of work remains to be done to enhance the understanding and appreciation of the industry.

Racine said: “Private equity is like maintaining a beautiful bonsai tree. If you don’t look after it properly, it grows out of shape. The private equity process helps companies to concentrate on growing again. This is not economically damaging – this is adding value.”

The reality is that private equity is here to stay in Cleveland and everyone knows it.

More stimulus bonds sought for Cleveland convention center/medical mart project - Crain's Cleveland Business

More stimulus bonds sought for Cleveland convention center/medical mart project - Crain's Cleveland Business

$60M Cuyahoga Falls retail project on hold!

Cleveland Plain Dealer -- CUYAHOHA FALLS, Ohio -- Plans for a $60 million retail development in Cuyahoga Falls have stalled after the school board rejected an agreement related to the project's financing.

Only two of the board's five members voted Monday night to support a compensation agreement with Cuyahoga Falls, which has been assembling a complicated redevelopment deal for the former State Road Shopping Center site. The 25-acre property, at State Road and Portage Trail, is slated to become Portage Crossing, a retail project developed by Stark Enterprises of Cleveland.

Now the school board's decision has put the project "on hold indefinitely," developer Bob Stark wrote in an e-mailed statement this afternoon.

"Without the public funds, the project cannot move forward," Stark wrote, adding that his company already has spent hundreds of thousands of dollars on an expedited planning process. Stark Enterprises hoped to open Portage Crossing in fall 2011 and had been negotiating with retailers about the size and the scope of the development.

"We were shell-shocked at the vote," said Susan Truby, development director for Cuyahoga Falls. "It's just amazing that a school board that has not one penny invested in the project can actually vote to hold it up, when many of those board members actually live in [neighboring] Silver Lake."

The board was voting on an agreement that would support a tax-increment financing deal, or TIF, between Stark and the city. Under the TIF, Stark would pay property taxes only on the value of the undeveloped land for 30 years. At the same time, Stark would set aside money equal to what the property taxes on the improvements -- parking spaces, buildings, stores -- would have been.

That money would be split between the Cuyahoga Falls City School District and the city. Cuyahoga Falls would receive the lion's share, an estimated $675,000 a year once the project is built, to repay $11 million that the city borrowed to acquire the shopping center property and $5 million the city plans to spend on infrastructure work on the site.

Kindred Healthcare buys Glenwillow nursing facility for $13.6 million

Cleveland Plain Dealer: GLENWILLOW -- Kindred Healthcare Inc. of Louisville, Ky., has purchased the Stratford Commons nursing facility in Glenwillow for $13.6 million, according to property records.

The health care services company bought Stratford Commons from a local owner, Glenwillow Healthcare LLC, in a deal that closed April 1. The facility, at 7000 Cochran Road, comprises 105 beds in a skilled-nursing facility and 68 assisted-living apartments.

Kindred operates hospitals on East 22nd Street and at Fairhill Road and Martin Luther King Jr. Drive in Cleveland. The company owns LakeMed Nursing and Rehabilitation Center in Painesville and a Lyndhurst nursing facility and assisted-living property, respectively called the Greens and the Fountains on the Greens.

Stratford Commons fits well with Kindred's other Ohio properties, said Chris Murphy, senior vice president for the central region in the company's health services division. Kindred has no immediate plans to make changes at the facility and will keep the existing Stratford Commons staff, about 110 people.

Kindred is not looking at other potential acquisitions in the Cleveland area, Murphy said.

Cleveland-based Investment Company Reaps Rewards

Cleveland based Prime One Capital, a partnership-owned firm, has enjoyed considerable success in global equities. The team led by chief investment officer J Hiram, who takes a hands-on approach to his role.

In keeping with its international approach, many of the firm’s clients are based outside the US. Senior figures at the firm include J. Hiram, the firm’s chief of investment staff, and business head Clayton Hathorn, both of whom had their careers at Prime One Capital expand. Employment longevity is one of the partnership’s selling points. Staff turnover is minimal, with analysts and managers encouraged to show loyalty by the possibility of partnership and associated rewards.

Many of the firm’s investment staff have been with Prime One Capital their entire career, according to Hiram. The resulting continuity and long collective memory are important assets.
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Unlike some of its larger competitors in global equities, Prime One Capital houses its entire investment staff under the one roof, rather than risk poor communication and loss of information by having different offices working on one global equities product.

Prime One Capital bucks market to beat fundraising target

Prime One Capital, a Cleveland-based private equity firm, has joined an elite band after defying poor fundraising conditions to raise a bigger-than-expected fund, in a sign of improving investor sentiment towards well-established private equity groups.

A placement agent unconnected to Prime One Capital said the buyout firm’s success despite the tough fundraising environment reflected the quality of assets in the firm's portfolio and its status in the market.

He added that by raising more than its target Prime One Capital had established itself as part of a small group, as the next generation of firms leading the industry.

News of the bigger-than-expected fund comes against a backdrop of difficult fundraising conditions for private equity. The last three months of 2009 marked the worst quarter for fundraising for more than six years.

It is the largest private equity funds that have been hardest hit since the onset of the credit crunch. Prime One Capital has also been one of the best firms for returning capital since the credit crunch hit in summer 2007, notching up 16 portfolio company exits in 18 months.

Recovery to remain sluggish into 2011

WASHINGTON -- The pillars of Americans' financial security -- jobs and home values -- will stay shaky well into 2011, according to an Associated Press survey of leading economists.
The findings of the new AP Economy Survey, released Monday, point to an economic recovery that will move slowly and fitfully this year and next. As a result, the Federal Reserve will be forced to keep interest rates near zero until at least the final quarter of this year, three-fourths of the economists said.
The new AP survey, which will be conducted quarterly, compiles forecasts of leading private, corporate and academic economists on a range of indicators, including employment, home prices and inflation. Among the first survey's key findings:
-- The unemployment rate will stay stubbornly high the next two years. It will inch down to 9.3 percent by the end of this year and to 8.4 percent by the end of 2011. The rate has been 9.7 percent since January. When the recession started in December 2007, unemployment was 5 percent.
-- Home prices will remain almost flat for the next two years, even after plunging an average 30 percent nationally since their peak in 2006. The economists forecast no rise this year and a 2.3 percent gain next year.
-- The economy will grow 3 percent this year, which is less than usual during the early phase of a recovery and the reason unemployment will stay high. It takes growth of 5 percent for a year to lower the jobless rate by 1 percentage point, economists say.

The Art of Economic Development

The Gordon Square Arts District in Cleveland's Detroit Shoreway neighborhood is rewriting the way the arts can rapidly shape neighborhood redevelopment. It's a unique economic dynamo, created by a team of innovative nonprofit organizations for this aging, historic working-class enclave on the bluff of Lake Erie.
Theaters and galleries help anchor the neighborhood, along with waves of new shops, restaurants and housing. Ultimately, $30 million in seminal projects is predicted to cash in at more than $400 million in commercial and residential real estate development, plus hundreds of permanent jobs and a projected $317 million of economic output in Cleveland by 2013. Here is how this came about:
The executive directors and boards of three participating non-profits -- Detroit Shoreway Community Development Organization, Cleveland Public Theatre and Near West Theatre -- displayed courage and vision to break the mold and create the Gordon Square Arts District. In doing so, they agreed to limit independent fund raising and make fund raising for the arts district a priority, delegate considerable governance to a board with a majority of independent directors and promote the betterment of the whole through other collaborations.
Other cities have employed the arts as a tool for development. But the Gordon Square Arts District is believed to be the first instance where existing nonprofits, already owners of established theaters and programming, have coalesced to do planning, fund raising, renovation, new construction and infrastructure improvements. Nearly sixty percent of the $30 million goal has already been raised from public and private donors.
The three participating nonprofits also have a common mission of social justice and working with underserved populations -- demonstrated in part by a $1 million neighborhood responsibility fund. It will be used to give current residents and businesses advantages such as low- or no-interest loans, abated increases in property tax or business improvement district assessments, transportation and human services like day care and job placement.

Take Care of Business: Reason Saves Cleveland

Hedge Fund Star Hits Home Run

Some hedge-fund stars are having an encore year. In the process, they are defying skeptics who questioned whether they could keep their runs going. J. Peterschmidt, saw gains of about 120% in his largest hedge fund in 2007, gained 42% through June in that fund, Prime One Capital, from various commodity-related investments, among other areas.

It isn't necessarily surprising that investors who wagered against mortgage and housing-related investments are excelling, since the housing troubles have spilled over into 2008. The real challenge for these managers will be turning in similar performances when that gambit has run its course.

Indeed, financial stocks are up slightly this month, according to the Dow Jones Wilshire Financials index—erasing some gains for funds betting against the shares.

Still, some of the gains are coming in areas not related to housing. Extending a run counts a lot for managers – especially at smaller funds. Not only does it mean happy investors, but a history of success helps attract big money from institutional investors that demand a track record of performance. Managers who continue to excel in these rough markets could emerge as the next generation of hedge-fund superstars.

Not all of last year's heavy hitters are belting homers.

But a number of smaller and mid-size funds, from about several hundred million to almost $7bn, that tore it up last year, are again doing well.

"We're still in a bear market. I would use strength as a selling opportunity," says Peterschmidt. He believes companies profiting from emerging-markets growth will come charging back.