Hedge Fund Weiss Buys Up Gartmore Fund Shares

Sep 14 2010 | 1:13am ET

Activist hedge fund Weiss Asset Management is aiming to profit from the Gartmore Group’s pain.

The Boston-based firm has increased its investment in Gartmore’s Growth Opportunities fund after that vehicle’s discount to net asset value ballooned in the wake of the resignation of its manager, Gervais Williams. That fund’s board of directors filed a notice of termination with Gartmore following Williams’ exit; it will reportedly interview other potential managers before deciding whether to fire Gartmore.

Weiss now owns 6.2% of the Gartmore fund. Its discount has more than tripled to 10%, from an average of 3% over the past year. In October, shareholders who have held the fund for more than a quarter—in other words, not including Weiss—will be able to tender their shares at a 2% discount.

“We think the board should take steps to eliminate the discount that the fund’s shares are trading at versus its net asset value,” Eitan Milgram, head of trading at Weiss, told the Financial Times.

Weiss is no stranger to the board at Growth Opportunities. The hedge fund owns a 29% stake in the Marwyn Value Investors fund, which shares a chairman, Robert Ware, with the Gartmore fund.

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