Ambitious plans by Cardinal Asset Management to launch a raft of hedge funds and funds of funds have seemingly ground to a halt. One former staffer said the firm has been unable to roll out the funds because of a reversal by 15%-owner F&C Asset Management, which had inherited a commitment to provide seed capital. Another ex-employee, Stuart Davies, who was one-third of Cardinal’s fund of funds management team until he and his two colleagues departed this summer, confirmed that “when we left, we hadn’t been funded.” The firm is not believed to be managing any single manager or funds of funds at the moment.
Deborah James, spokeswoman at F&C, said the firm “doesn’t recognize the validity” of this description of events, but declined to provide details. Calls to Cardinal were referred to Paul Kearney, co-founder, who did not respond to messages. The firm’s other co-founders, Nick Corcoran and Nigel McDermott, did not return repeated calls and emails.
A former F&C employee said the relationship between Cardinal and F&C was unclear and that the business development team was not encouraged to promote the funds. “I really don’t know what the deal was with [Cardinal],” he said. “It was never given to us as something we could sell.”
Cardinal emerged in 2004 as a partner of ISIS Asset Management, which subsequently merged with F&C Management to become F&C Asset Management. ISIS’ contract with Cardinal was to fund the firm’s funds of funds and single manager hedge funds with up to $800 million, said the ex-Cardinal employee. But F&C already had an alternatives business of its own and, following the merger, withdrew its commitment to the Cardinal funds, he continued.
Cardinal has been hit by a series of key staff departures, including that of Davies and fellow fund of funds managers Paul Boulton and Christopher Peel (iialternatives.com, 9/16). Boulton declined to comment when reached on his cell phone, citing contractual obligations. Peel could not be reached by press time.
Another employee to jump ship is Tim Peach, who came onboard in May to spearhead marketing and distribution (iialternatives.com, 5/13) but left the firm after only a few months to join Surrey-based DE Capital Management. Peach declined to comment.