Capital ideas: Veteran investor heads up hedge fund.

• Author: Stokes, Jeanie
• Position: Pulling the Strings - Jerry Peterson - Brief Article

VETERAN MONEY MANAGER JERRY Peterson says the more bad markets he encounters, the more frustrated he is to see people losing capital because of volatile investments.

After 19 years as a senior partner and key member of the mid-cap investment team at Denver Investment Advisors, Peterson left the mutual fund industry to form Agger Capital Management LLC. The Englewood-based money-management company Is dedicated to building and preserving capital regardless of market conditions. Agger's initial Investors include senior executives for media and entertainment companies across the U.S. as well as several wealthy Coloradans.

The vehicle of choice Is the hedge fund, which largely is restricted to high rollers with money to lose in the sometimes-risky pursuit of high returns. "Hedge funds have had a bad reputation. Our goal is to make money in good and bad markets," says Peterson, Agger's chief investment officer.

That's more in keeping with how a hedging strategy should work. By taking long or short positions in stocks, the manager is able to reduce investment risk and lock in profits in a volatile market.

With many mutual funds performing dismally during the past two years, there's a real trend towards absolute return funds like Agger, Peterson says. The problem is that many fund managers "don't know how to be flexible." They're also restricted by the stated goals for a particular fund, he says.

Managers at Janus, Invesco, Oppenheimer and elsewhere in Denver's mutual-fund sector, are usually charged with finding growth investments, which have been few and far between in recent months. Increasing cash holdings Is about their only defensive...