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Absolute Capital Management - equity fund, activist fund

2008-07-23

Count of distinct funds: 2
Capital base: $1.2B as of Dec '07; $3.2B at peak (excluding Argo, for equity fund)
Loss: 25% (equity fund)

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stories: ft.com, ft.com, co.uk, finalternatives.com, finalternatives.com, finalternatives.com, bloomberg.com

Update, Implosion of Activist Fund, 2008-10-01

Details are scant, but AbCap has apparently also closed down its activist fund:

Absolute Capital Management has closed an activist hedge fund and expects "substantial" redemptions in four funds nearing the end of a year-long lock-up, writes James Mackintosh.

We'll keep you posted. The above article also states:

Mr Kennedy said the company was "not over". AbCap manages $884m, down from $3.25bn before the crisis hit and the Argo credit division was demerged. "There's still a good chance that we will hang on to something substantial," he said.

Original Writeup, 2008-07-23:

Note: Absolute Capital Management is not the same as Absolute Capital Group, based in Australia, which we also have listed.

While we had listed Absolute Capital Management on September 19, we have since clarified our "implode" categorization, requiring that a fund actually be wound down or bought out, rather than merely having suspended redemptions. So we are re-imploding them (for real) now, as it appears that this is now the case for at least one ACM fund:

Absolute Capital Management has closed one of its hedge funds and shuttered its Mallorca offices in an effort to stabilise the hedge fund group after it demerged its most successful division.

Aim-listed AbCap yesterday reported a pre-tax loss of €32.9m (£26.1m) after writing down €74.1m of goodwill on acquisitions, including Argo Capital, now demerged.

The group also warned that potential legal claims for losses suffered by its hedge funds could leave it without the resources to keep trading.

The article did not say which fund out of the eight or so we believe ACM runs. The shutdown of the offices also strikes us as a bad sign.

The TimesOnline has more detail on the losses and turmoil at the fund outfit.

Original Writeup, 2007-09-19

Bloomberg reports that Absolute, a fund shop based in Majorca, Spain, has suspended redemptions from seven of its funds, and is seeking to freeze redempetions for a year. The moves are coincident with co-founder and manager Florian Homm's departure (Homm apparently managed three of the funds) and attempts by Absolute's investors to withdrawl approximately $100 million. Absolute is seeking to restructure the problematic funds:

Under the proposed reorganization, the illiquid positions will be transferred to a new fund in which investors will get separate shares. Absolute will hire external advisers to value the illiquid assets before selling them, the company added. The other shares would track the liquid portfolio.

Surprisingly, the funds aren't fixed-income/mortgage securities funds, so we're unclear on why they "can't be valued". Clearly there is more to this story; we'll post more as we hear it.

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Important: This fund is on our list of hedge funds that have "imploded" (see also ailing lenders). However, please note that "imploded" is a somewhat subjective. The "imploded" list contains hedge funds (or other unregulated and autonomous speculative investment funds) which have gone through some sort of permanent adverse change. This is a somewhat subjective call, and does not necessarily mean total shutdown or bankruptcy. It can also mean steep and rapid mark-downs in net asset value; or abnormal "bail-out" by corporate parents or peers in order to avoid write-downs and provide liquidity. The funds are of any type and sector.