Ian King, Deputy Business Editor www.Timesonline.co.uk
Investors in a hedge fund run by one of the sector’s biggest hitters have reacted angrily after it was put into liquidation by the managers, leaving them to pay the winding-up costs.
J O Hambro Capital Management, the investment boutique, wrote to investors this month to say that it was putting the Trident North Atlantic Fund into liquidation with immediate effect. The fund, incorporated in the Cayman Islands, specialised in investing in mid and small-cap companies in the UK, Europe and the United States and styled itself as having an “active value” investment style.
It had more than £235 million of assets at one point and was run by Christopher Mills, a founding partner of J O Hambro Capital Management, who has worked as a fund manager for 34 years and who is one of the City’s highest-paid fund managers. In 2006, despite drawing a nominal salary of £1, he took home a bonus of £6.76 million.
Other directors of the fund included Basil Postan, also of J O Hambro Capital Management, and David Sargison, who is described in filings made by the fund to US Securities and Exchanges Commission as working for a Cayman-based operation called Ironshore Corporate Services Limited. Among Trident North Atlantic’s investments have been Castle, a support services firm; Payzone, the struggling payment acceptances company; Quarto, the publishing group; and AT Communications, an AIM-listed telecoms company that went bust in June.
However, after years of poor performance, the funds under management are believed to have shrivelled to less than £20 million and investors have received a letter informing them that the fund has been put into “voluntary liquidation with immediate effect”. The letter said that Kinetic Partners, the Cayman-based liquidator, would “be remunerated out of the assets of the company for all work and expenses reasonably and properly undertaken and incurred in the winding-up of the company.”
One investor told The Times: “The fund has been a bit of a dog and so now they have decided to liquidate it. Fair enough; things go wrong. What upsets me is that the costs of the liquidation are borne by the few of us remaining investors. These guys take their huge fees for years, lose money and still expect the few loyal investors left to bear the legal costs of winding the thing up. It’s a bloody cheek and made more insulting by the guff on their website about how their clients’ best interests are always to the fore.”
The closure marks the second fund that J O Hambro Capital Management has had to liquidate in a year. The $240 million Trident European Fund, which was run by Mr Postan, shut last November after a bet on shares of Volkswagen apparently backfired. Volks-wagen shares rocketed in October last year after Porsche said that it had options allowing it to raise its stake in the carmaker to 75 per cent. This forced short-sellers to cover themselves hurriedly and led to some investors incurring huge losses.