The multi-strategy hedge fund Eton Park Capital Management was founded by Erich Mindich in late 2004 in New York City with a then unprecedented startup capital of 2 billion dollars with a targeted closure of 3.5 billion dollars within its first year of operation. With a minimum requirement of 5 million dollars investment, today the firm manages about 13 billion dollars and continues to attract money from sources similar to its initial landmark clients such as the Harvard Management Company. In addition to its NYC offices, Eton Park has built teams in London and Hong Kong to pursue international investment opportunities in those areas.

The reason that Mr. Mindich could raise a 3.5 billion dollar fund harks back to his exceptional career. Previous to launching his fund, his singular tenure at Goldman Sachs was remarkable. He joined Goldman Sachs as an intern while attending Harvard University. In 1988, the year he earned his Bachelors in Economics, he started working at Goldman Sach’s Equities Arbitrage department.

After a short but noticeable span of four years, he began to run the department itself which comprised many senior employees. His early promotion was well vindicated within two years when he made the Equities Arbitrage desk one of the most profitable divisions in Goldman Sachs and consequently, at the age of twenty seven, became the youngest partner in the history of the firm, an achievement untouched so far.

From there on he continued to climb the ranks at Goldman Sachs: co-COO of Equities Division in 2000 and co-head of the same in 2002, Senior Strategy Officer of Executive Office in 2003, and subsequently Chair of the firm-wide Strategy Committee. With such ambitious competence, going forward it was either heading to run the firm or starting his own venture, and of course he chose the latter.

In line with his hands-on experience on the equity arbitrage side of business, his fund’s declared mandate focused on long-short equity and convertible arbitrage along with other opportunistic capital structure strategies. Yet, there were some unusual factors in the fund structure and style.

First, while the 2-20 fee structure was in norm with the industry, the redemption fees were atypical. In most hedge funds the investors are allowed to redeem their capital on a quarterly basis – even though the most successful funds emphasize that the capital stay with them so as to enable them to fully realize the potential returns of their strategies, this is mostly a tacit understanding and not part of the documentation itself. In the case of Eton Park, though, Mr. Mindich explicitly mandated penalties of early redemptions: If investors were to pull their money out before 4 years, they would be subjected to redemption fees as high as 6%. Despite that unusual clause, it is a testament to Mr. Mindich’s reputation that institutional investors such as Harvard and large pension funds signed up with him.

Two, in accordance with the somewhat longer term view of the fund’s investment horizon, Eton Park decided to allocate up to 30% of its capital to illiquid private equity investments. In sharp contrast to the relatively quick turn-around trading strategies and mostly transparent pricing involved in arbitrage, private equity investments have to go through the cycle of exiting in capital markets and until then be shrouded in sketchy estimates of valuation.

This focus on private equity was indeed a differentiating factor in a rather overcrowded hedge fund environment back then. But this cannot be simply attributed to differentiation for the sake of differentiation needed in the mid-2000s (when many entrant hedge funds were competing for the abundant capital availability), as the reality is that Mr. Mindich was astutely evaluating the most opportune areas in the investment world regardless of their categorizations and he perceived the private equity universe somewhat neglected in favor of the liquid debt and equity capital markets.

Three, it was the same kind of differentiating drive with a focus on the most opportune markets which led Mr. Mindich to articulate his insistence on investments in the global markets, especially emerging markets. Initially, the fund meant to explore public and private equity in Latin America, Eastern Europe and South Africa. Most notably, Eton Park made significant investments in Brails Telecom, one of the largest telephone companies in Brazil, and Mexico’s Cemex, the third largest cement producer in the world.

In November 2007 Eton Park expanded its reach to the emerging Asian markets by buying a 5% stake in Reliance Capital, the largest mutual fund in India with 20 billion dollars of assets under management. In 2010 they did a similar 125 million private investment in the Indian company JSW Limited, this time in the logistics sector of ports. Both the investments were made from a separate pool of 500 million funds they raised in mid-2007 to deploy in private equity prospects in the emerging markets.

In 2007, Eton Park also opportunistically added credit strategies to enhance their returns. This was achieved by buying out the 300 million R6 Capital Management fund. R6 had a core competency in corporate distressed debt, asset-based financing, and the private lending markets. In a letter to shareholders, Mr. Mindich expressed his sense that these markets will soon come under a distressed cycle (especially residential and commercial real estate) and that R6 had the right platform and team to benefit from the upcoming environment. Of course, R6 was also the preferred acquisition as its founder Ralph Rosenberg was an ex-trader from Goldman Sachs. Mr. Rosenberg helped form and run the Global Special Situations Group at Goldman Sachs that often interacted with Mr. Mindich’s desk.

As Eton Park expands its multi-strategy platform, it continuously executes trades in long-short and arbitrage strategies to hedge its positions. For instance, one of its biggest recent holding (close to 1 billion dollars exposure) has been protective puts on EEM – the iShares exchange-traded fund mimicking the MSCI Emerging Markets Index. This is obviously an insurance against the long wagers on the public and private companies in the emerging markets. So while the individual 100 million plus investments in India make global headlines, the media pays much less heed to the trades that hedge the same. The latter can only be gleaned from the required SEC 13 F filings.

Similarly, just because Eton Park’s long portfolio includes only blue chip names such as Apple, Viacom and Morgan Stanley, that does not translate into a straightforward endorsement of the companies, as the short side could be executing some well-guarded arbitrage play. The same principle could apply to their selling of their gold position in December 2011. Unlike other more voluble hedge funds involved in the gold trade, Mr. Mindich was quite about Eton Park’s buying and selling of the commodity.

It seems that Mr. Mindich has well adopted the hush-hush nature of the money-making proprietary desks of Goldman Sachs. With a relatively low loss of 10% in the financial crisis of 2008 and an annual rate of return of 7% since inception, one would imagine that his investors would not be seeking verbose explanations. But recently there have been reports of investor complaints for underperformance in years since 2009 (down 11% in 2011) and the difficulty of redemptions from the fund.