Sprott Overhauls Flatiron Amidst Flagging Performance, Asset Drop

Dec 6 2012 | 11:06am ET

Sprott Inc.'s acquisition of hedge fund Flatiron Capital Management has gone sour in a hurry.

Less than six months after agreeing to buy the 12-year-old fund for C$10.7 million in cash and stock, Sprott is making big changes to the unit, including closing one of its funds. Flatiron's assets under management have fallen by almost half to just C$140 million, leading Sprott to restrict redemptions from its remaining funds.

Sprott said it shut the Flatiron Market Neutral Fund at the end of last month. In addition, Flatiron founders Steve Duenkler and Parm Kaliarai have been removed from management duties, although they remain advisors to the firm. In their place will be a group of managers from Sprott and Front Street Investment Management, for whom Flatiron managed its Strategic Yield Fund.

That fund lost 32% last month.

The move also comes after Sprott failed to raise more than C$20 million for its listed Flatiron Convertible Strategies Trust, forcing it to cancel the offering.

Facing angry investors on a conference call Monday, CEO Peter Grosskopf said that payments to Duenkler and Kaliarai were based on performance and asset retention. "They will suffer from the outcome here," he said.

"This has been a most unfortunate and most undesired situation for everyone," Front Street CEO Gary Selke added. "There are no winners here, just people who have suffered."


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.