Coast Asset Management is making changes to the ownership structure of its $240 million Coast Special Situations Fund, which the firm launched in May of 2003.
According to a source close to the firm, under the original agreement, Brian Selmo, manager of the fund, was seeded by Coast, and now that his fund has performed well and has a track record, both Selmo and the firm felt the time was right to revisit the agreement.
“It is a simple equity transfer. Now Coast will become an equity owner,” said the source, who spoke on condition of anonymity. “The changes are that the economics are more focused toward Brian.”
Coast Special Situations is up 5% this year through July, and has seen gains of almost 18% since inception.
The strategy of the fund and all of its back office support and marketing resources, as well as the location of Selmo’s offices in Coast’s headquarters, will remain unchanged, and the assets of the fund will be transferred to a new vehicle, the Eagle Lake Special Situations Fund, on Oct. 1.
Coast Asset Management has various funds, including single-strategy hedge funds in the fixed-income arbitrage space, fund-of-hedge funds that don’t invest in the firm’s single-strategy funds, and other structured financed vehicles.
In total the Calif.-based firm has $7 billion in assets under management.
Before joining Coast, Selmo was with the New York-based firm Third Avenue Funds.