Thursday, 27 April 2017
Last updated 3 hours ago
Nov 11 2010 | 2:12am ET
The loss of its star hedge fund manager has Gartmore Group on life support, according to some investors and shareholders.
Roger Guy announced his retirement on Monday, and investors have wasted no time in heading for the exits. Private clients have already yanked millions from the firm’s funds, the Financial Times reports, including retail and listed funds not managed by Guy.
Skandia’s European Best Ideas Fund has already fired Gartmore, which had a €38 million mandate managed by Guy. Another fund platform told the FT that its investors had pulled £2 million since Guy’s announcement.
Guy manages £3.5 billion, about 17% of Gartmore’s total assets.
“It seems pretty terminal,” one large shareholder told the newspaper. “There is no real future for them as an independent group without the hedge fund business and Roger. They are going to be a smaller, considerably less profitable entity, and they need to try to sell the company as quickly as possible.”
Gartmore has engaged Goldman Sachs to consider strategic alternatives, including a sale or merger. The firm’s share price has plummeted since Guy’s announcement, although some investors, including Lansdowne Partners, have initiated or increased their stakes in the firm in anticipation of a sale.
Guy was made noticeably unhappy by the suspension of his co-manager, Guillaume Rambourg, for violating internal compliance rules he deemed excessive. But people close to the hedge fund manager told the FT that his unhappiness with Rambourg’s treatment did not push him to retire. CEO Jeffrey Meyer said that “he gets along with everyone at the firm and we worked through the issue with him. It just kept coming back to the same loop, of wanting to be with his family.”
Rambourg left the firm in July to fight a Financial Services Authority probe into how he and Guy allocated commissions.
Gartmore acknowledged in its initial public offering prospectus last year that “the loss of certain key portfolio managers, such as Roger Guy and Guillaume Rambourg… could impact more heavily on Gartmore’s business than the loss of others.” And Meyer admitted, “we certainly would not have IPOed under any circumstances” if Guy had expressed his concerns about staying at the firm prior to the share sale.
That certainly didn’t assuage one large Gartmore shareholder, who told the FT, “there are serious questions to be asked, [including] why a company which was so reliant on just two people was allowed to list in the first place.”