This content is from: Portfolio

Soros Dumps Atlantic Investment Management

George Soros has dumped long-time hedge fund firm Atlantic Investment Management from its roster of firms to which he farms out money. According to his most recent regulatory filing, at the end of the first quarter, he failed to list the New York City firm

George Soros dumped long-time hedge fund firm Atlantic Investment Management from its roster of firms to which he farms out money.

According to his most recent regulatory filing, at the end of the first quarter, the Hungarian investor failed to list the New York City firm, with which he had a relationship since 2001.

He did list 10 of the other 11 firms he had used at year-end. Interestingly, one of them continued to be FrontPoint Partners, which earlier this week announced it would shut down most of its funds following a rash of redemptions. 

The firm has had to defend its reputation since late last year when published leaks linked portfolio manager Joseph Skowron to the arrest of a French doctor who was accused of disclosing insider information about a clinical drug trial. Frontpoint put Skowron on leave and got rid of his entire health care team. In April the government arrested and charged him with insider-trading.

Atlantic was founded in 1988 by Alexander J. Roepers. He initially started as a long-only manager, but in February 1993, he launched AJR International, an offshore hedge fund. The following year he created Quest Capital Partners, LP, a domestic version of the fund. In 1996, he launched Cambrian Fund Ltd. and its domestic equivalent, Cambrian Partners LP.

Altantic is a long-short equity investor specializing in mid-cap value stocks. It seeks stocks trading at 7 to 8 times cash flow that are attractive on their own merits as well as to strategic buyers.

Most of its funds are up about 3 percent so far this year. Firm-wide assets under management are currently around $1.7 billion, down from more than $4 billion at its height several years ago.

Part of the reason for the asset erosion was a lousy 2008. That year Cambrian was off about 54.4 percent while AJR fell about 39.5 percent. Roepers was hurt by the overall stock market implosion as well as the rush to the largest capitalization stocks during a roughly four-week period following Lehman’s bankruptcy filing in September of that year. He was also hurt when he incorrectly bet the markets had bottomed by the end of September.

Meanwhile, Roepers had no gates, so he faced a rash of redemptions in November and December of 2008 as well as 2009.

Despite these nasty drawdowns, AJR has compounded at a 14 percent net annualized rate since inception while Cambrian has generated 20 percent annualized gains.

And although his international funds have not yet returned to their high water mark, roughly 75 percent of the firm’s assets under management are above the critical hurdle.

Roepers is currently bullish. He thinks the next two to four years will be a good stock picker’s environment, fueled by the economic environment and restructurings, which should serve as a catalyst. He is looking for a step up in private equity deals.

Already he has participated in a few of this year’s deals. He was a holder of ITT Industries, which earlier this year announced plans to divide into three companies. He held shares of French chemical maker Rhodia when nearly two months ago it agreed to be acquired by the Belgian chemical and plastics company Solvay for nearly $5 billion.  And he was an investor of Del Monte Foods, which several months ago was acquired by several private equity firms.

And which are the firms with which Soros still has money invested? Bristol Investment Partners, Discovery Capital Management, EAC Management, FrontPoint Partners, Martin Currie Investment Management, Realm Partners, Round Table Investment Management. RR Partners, Select Equity Group and Sirios Capital Management.

Related Content