Report: Gradient On The Brink After 63% Loss

Oct 17 2008 | 12:00pm ET

London hedge fund Gradient Capital Partners is in big trouble as losses continue to pile up.

The firm’s US$2.5 billion European equities hedge fund is down 63% this year, leaving it on the brink of collapse, The Telegraph reports. According to the newspaper, the firm’s founders, Ivor Farman and Scott Pagel, are determined not to close the firm, and may have a structural advantage over peers who are also facing big losses.

“The fund has been badly hit by poor performance and big redemptions,” one source told The Telegraph. But, noting that the firm employs just four people, noting that “it has been sensible to keep its cost base down so it will probably tough it out and re-emerge at the other end.”

Of course, Gradient hasn’t kept all costs down: Farman and Pagel paid themselves £100 million (US$172.5 million) each over the past two years, after the fund posted a 56% return in 2005 and 47% in 2006.

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