PhillyDeals: An investment pro changes with the times

Here's a career for the boom-and-bust years:

Greg Levinson, raised in Kingston, Luzerne County, graduated with a bachelor's degree from Penn's Wharton School in 1995 and went straight to work at the late Cooper Neff, the King of Prussia securities-trading shop that used to rank among the dozen top firms, by volume, on the New York Stock Exchange.

In 2002, Levinson and his partners raised $300 million and started what was briefly Philadelphia's biggest hedge fund, Polaris Advisors Management L.L.C. They arbitraged convertible bonds and tracked price data for new trading strategies.

"But in 2004 the arb trades started to melt away," Levinson said. "So we repaid our investors. At the ripe age of 32, I retired and took two years off [with his wife and youngsters]."

When Levinson went back to work in 2007, the Philadelphia investment scene had paled. He had to go to Connecticut, where "I did nine months at Sailfish Capital," running a $1 billion convertible arb portfolio.

"It's a shame what happened in Philly," Levinson said.

Owner BNP Paribas shut Cooper Neff; Susquehanna Investments, another big trader, exited several businesses; the Philadelphia Stock Exchange, which spawned Cooper Neff and Susquehanna, sold out to Nasdaq. "Now," Levinson contends, "too many people I know have to get on a train, or get an apartment in Greenwich, to practice their craft."

Seeking to "reinvent," Levinson opened Schooner Investment Group L.L.C. in Radnor, hired trader Tony Fusco, another Cooper Neff veteran, and set up the "long-short" Schooner Growth and Income Fund.

From hedge to mutual funds? "It became clear to me there'd be a convergence between the mutual-fund space and the hedge-fund world," Levinson said.

Both had problems, he explained: Hedge funds got too big and borrowed heavily on barely profitable strategies, with "very little transparency or oversight."

Mutual funds were safer: "High liquidity, high transparency, no funny business." But also boring: "Very pedestrian," and seldom beating the market.

"So merge the best of the two worlds."

The result is the Schooner fund, a tiny $7 million fund that ranked in Morningstar Inc.'s top 1 percent of U.S. stock funds its first year of operation (September 2008-August 2009), gaining 3 percent (for Class C shares) while the S&P 500 lost 18 percent.

How'd he do that? Trading call options (which provide the right to buy shares at set prices) for stocks that had dropped and using them to cushion losses, or reselling them at a profit as prices recovered. The fund also owned shares of Apple Computer, Anadarko Petroleum, and Verizon, among others.

The strategy meant a lot of trading, which makes the fund a more appropriate investment for tax-protected accounts.

"We've invested some of our clients' money in the Schooner fund," said Michael Heaberg, managing director of $500 million-asset Axiom Asset Management in Radnor, where Levinson interned in college.

"The covered-call strategy, the convertible-arbitrage strategy, is not something we can do well ourselves. When the market went down, his fund went down, but not as much as the market. Since it's gone up, his fund has gone up, though not as much. It's met the expectations we had." That's praise, in fund-speak.

When will the real economy come back? Not soon, say JPMorgan Chase Bank economic analysts Bruce Kasman and David Hensley.

They estimate the economy now grows "at a sustained 3.5 percent growth rate." That's "disappointing" compared with the usual 5 percent recession recovery. But it's still more than most economists expect.

Even at their rate, they say, it will take "until sometime in 2013 before the economy restores the jobs lost in the downturn."

Keystone Property Group, Bill Glazer's office-rehab investment firm, said it has leased 100,000 square feet at Keystone Executive Campus in Radnor to Main Line Health for $22.8 million over 10 years. Main Line, a nonprofit owner of Bryn Mawr, Lankenau, and Riddle Memorial hospitals, will put its headquarters and home-health group there.

Sovereign Bank lent Keystone Property Group $17.5 million to rebuild the facade and building systems at the site, which housed Wyeth offices and drug labs, said Keystone Property Group spokeswoman Aimee Alexander.