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

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

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.