High-water Marks.(The Talk of the Town)(boat racing for companies)

Prior to the launch of the annual Hedge Fund Regatta, which took place in New York Harbor one recent mild evening, Michael Fortenbaugh, the commodore of the Manhattan Sailing Club, called the competing skippers together at the marina in Battery Park City. The mood was sober, and, while pre-race tension alone might have accounted for that, the past few weeks have been stormy ones in the hedge-fund industry. "Boat No. 1--that's the Connecticut Hedge Fund Association," Fortenbaugh said. "No. 2--that's Caxton Associates. No. 4: Alternative Investment Group."

Wait a minute--what happened to boat No. 3?

"Boat No. 3 got liquidated," Fortenbaugh said. "Bad joke."

The Hedge Fund Regatta was founded four years ago by T. J. Dalton, a broker at the Griswold Company. "They already had an architects' regatta and a restaurant regatta, so I thought it would be good to get a bunch of hedge-fund managers," Dalton explained later, adding that the money raised would fund sailing programs for city youths. Dalton, who learned to sail as a boy at the Jersey Shore, said that many of his hedge-fund clients were handy with a mainsheet. "Sailing a boat is very competitive, and obviously managing money is all about competition and performance," he said. "And it takes a lot of money to have a big boat."

The race began at about seven, as the sun was dropping in the sky behind Ellis Island, near the floating clubhouse--essentially, a big barge equipped with a bar and a disco ball--which is moored in New York Harbor for the summer months. "The tugboats weren't very happy when we first had recreational sailing out here, but the second year I discovered that the Captain of the Port is a sailor," Fortenbaugh, who was dressed in a blazer trimmed with insignia, white pants, and white bucks, said as the rubber dinghy he was piloting approached the clubhouse. "Industry doesn't want any recreation at all," he said. "But that is not the American way."

The guests milled about, while ancient hits by Madonna and the Jackson Five played over the imperfect ...