A US hedge fund, Hunterbrook Capital, has initiated a distinctive venture, raising $100 million to execute trades guided by investigative reports from its associated newsroom, Hunterbrook Media.
This endeavor marks a novel method of supporting investigative journalism, particularly amidst challenges within the media sector such as recent layoffs.
Hunterbrook Media intends to prioritize investigative and foreign reporting in neglected regions, financing its journalism through fees from the hedge fund, departing from conventional models dependent on advertising or subscriptions.
Sam Koppelman, publisher at Hunterbrook Media, underscored the importance of journalism, affirming, “Good reporting shouldn’t have to be a bad business.”
The venture, co-founded by Nathaniel Horwitz and Sam Koppelman, is driven by a shared vision of harnessing the underappreciated assets of reporting and the expertise of journalists and Open Source Intelligence specialists.
The newsroom debuted with a report revealing that Hunterbrook Capital had engaged in trades informed by the story before its release, demonstrating the model’s capacity to benefit from thorough reporting and reinvest in additional journalism.
Recommendation and Ethical Considerations
Hunterbrook’s business model incorporates a compliance layer to differentiate the journalistic endeavors of Hunterbrook Media from the trading operations of Hunterbrook Capital.
This division is essential for managing potential conflicts of interest and compliance challenges, especially regarding trading based on undisclosed material information, which may constitute securities fraud.
Fitzann Reid, formerly with the US Securities and Exchange Commission and now serving as the venture’s general counsel, holds a critical responsibility in determining whether a piece from Hunterbrook Media can be disseminated to its hedge fund, thereby upholding ethical standards.
Financial and Operational Details
Hunterbrook Capital’s funding structure relies on $100 million secured from a blend of institutional investors, family offices, and individuals.
Noteworthy initial backers comprise Laurene Powell Jobs’ Emerson Collective, David Fialkow, co-founder of General Catalyst, Marc Lasry, co-founder of Avenue Capital, and Outside the Box Investments.
The hedge fund intends to levy a conventional 2 percent management fee and a 20 percent performance fee, with a portion of these fees allocated to support Hunterbrook Media’s journalism efforts.
The newsroom, under the leadership of Horwitz and Koppelman, aims to function with a budget of roughly $5 million for the year, backed by $10 million in seed funding garnered last year.
The team comprises three full-time reporters and a network of international freelancers, alongside a sole full-time trader, Courtney Dunlevie, on the hedge fund side.
This operational structure highlights the venture’s dedication to delivering top-notch investigative journalism while exploring financial prospects stemming from the insights gained.
