Tuesday, 28 June 2016
Last updated 3 hours ago
Dec 13 2013 | 10:10am ET
John Paulson's belief in gold has cost him a very great deal of money—but it may have cost Eric Sprott his job.
Sprott, arguably Canada's best-known hedge fund manager, has also doggedly stuck with his bet on the precious metal—which, in turn, has stuck investors in Sprott Inc.'s flagship with losses in excess of 50% this year, The Wall Street Journal reports. Sprott, whose faith in silver has also proven a loser, has seen his fund lose double-digits in three years running, and his assets under management drop from US$3 billion to US$350 million.
And, as of 2015, they'll drop to $0: Sprott's namesake company is phasing him out. While Sprott will remain chairman of the firm he founded in 1981, by the end of next year he'll be relegated to "chief cheerleader duties," Sprott CFO Peter Grosskopf told the Journal.
"Nobody here likes me to use that word 'turnaround,' but let's face it: That's what we're doing," Grosskopf said. The move follows the firm's decision last year to add co-chief investment officers to all of Sprott's funds.
Sprott Inc.'s assets have fallen to US$7 billion from US$10 billion, almost entirely due to losses on gold and redemptions. Despite pushing Sprott aside, the firm will continue to focus on gold, but with a new emphasis on risk management, Grosskopf said.
Still, it's been a startling fall for the industry stalwart: Sprott posted his best return in 2010—41.2%—just before his luck turned. Despite the losses over the past three years, the flagship maintains a 5.8% annualized return since inception.