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Tough Times for Paul Touradji

Gil Caffray’s decision to leave Touradji Capital Management as CEO to become chief investment officer at Tiger Management is the latest of a series of blows to Paul Touradji.

Gil Caffray’s decision to leave Touradji Capital Management as chief executive officer to become chief investment officer and a member of the management committee at Tiger Management is the latest of a series of blows to Paul Touradji.

Sure, Caffray will remain a special advisor to Touradji. And those familiar with the firm assert that since Touradji shares Tiger’s offices, it will still be business as usual. They insist his role is not changing much.

However, this is hard to believe. Special advisor is different from CEO. And given Julian Robertson’s ambitious plans for growing his seeding business — which have not yet been publicly communicated — it only makes sense Caffray’s priorities will be with Tiger. At the least, he will be spending less time with Touradji going forward.

Caffray is said to have played a very valuable role at Touradji, freeing up the hedge fund manager, known for loud outbursts and mood swings, who had been involved in both the firm’s investments and operations.

And in recent years Touradji, who manages $2.5 billion, has not done a great job on the investment side. Last year the commodities fund finished up just 2 percent, well below most market averages amid a commodities bull market. He also greatly lagged behind in the booming global markets in 2009 when he was up just 4.5 percent.

Caffray’s departure comes after several important defections in 2009: former marketing chief Mark Landis, senior analyst Mikolaj Sibila and Anthony Schweinzer, who was part of the private equity team.

And then, of course, there were the high-profile departures of Gentry Beach and Robert Vollero, who joined Touradji in 2005. Their departures led to a contentious court fight. Beach, who ostensibly helped build Touradji’s early success, claiming Touradji withheld his bonus of around $25 million. In an amended suit, Beach also alleged that Touradji promised to pay Vollero, Beach’s former partner, half of the pair’s bonus in exchange for badmouthing Beach. Vollero later joined the lawsuit.

Touradji has repeatedly called the charges "baseless" and the portfolio managers "disgruntled" employees who are using an "obvious shakedown ploy to try and get something to which they are not entitled."

He also counter-sued them, accusing Beach and Vollero of spreading false allegations that have hurt the hedge fund’s reputation and caused investors to leave. A New York State court also dismissed most of the claims against Touradji.

In a separate lawsuit, Touradji was also sued by a former business partner who alleged Touradji pushed him out of an oil drilling venture.

Touradji seems to a lightning rod for lawsuits, whether or not they are warranted. For example, in 2009, Amaranth Advisors LLC, the hedge fund that collapsed after losing $6.6 billion in 2006, sued Touradji for allegedly breaching two contracts related to the transfer and purchase of Amaranth’s base-metals portfolio. Touradji and employees were also accused of engaging in improper trading practices and misuse of proprietary and confidential information.

Two months later, Amaranth withdrew the lawsuit, asserting in a statement: “Amaranth has received and evaluated additional information regarding the transaction, including trading records and other information voluntarily provided by Touradji Capital, that is consistent with Touradji Capital’s position that it did not violate the agreement with Amaranth and did not misuse Amaranth’s proprietary information.”

Not all the news is bad. In 2010 Touradji named Sang Lee as president and chief compliance officer, responsible for non-investment activities. He also became a member of the operating and management committees. At the same time, the firm announced Caffray would become a Special Advisor, transitioning his focus from the day-to-day to concentrate more fully on strategic planning.

Obviously, Touradji was already preparing for Caffray’s eventual departure.

Touradji graduated from the McIntire School of Commerce at the University of Virginia in 1993. Prior to his Tiger stint, he specialized in quantitative arbitrage, mostly at O’Connor Partners.

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