GAM Fund Management has pulled more than $250 million from hedge fund shop Pirate Capital, which has lost $1.5 billion of investor capital over the last 12 months.
GAM, a London fund-of-funds manager owned by private bank Julius Baer Group, was the largest investor in Pirate, a Norwalk, Conn., activist investment firm led by Tom Hudson.
It�s unclear precisely why GAM pulled its investment in Pirate, but the fund-of funds operator may have been uncomfortable with the size of its position relative to Pirate�s overall assets. GAM withdrew $250 million to $300 million on June 30.
Other investors pulled smaller amounts on the same date. Pirate�s assets have plunged to about $400 million, from a peak of $1.9 billion in the middle of last year. Much of the outflow is attributable to last year�s poor May-July results for Pirate�s flagship Jolly Roger Fund, and to investment-staff departures � at least half of the firm�s investment professionals left last September.
Following that three-month rough patch, the U.S. version of the Jolly Roger Fund was down 4% for the first seven months of 2006, while the offshore version was up 0.4%. For the same period, both versions of firm�s smaller Jolly Roger Activist Fund were down 8.7%.
Other than last year�s three-month skid, Pirate�s funds performed decently in 2006. For the first six months of 2007, the U.S. version of Jolly Roger Fund is up 12.4%. In 2006, the fund posted a 9.5% return.
In the first-half, Dow Jones�s index of event-driven managers was up 7.0%, after posting a gain of 12.6% for 2006.
The offshore edition of Jolly Roger Fund was up 1.5% in the first half and 10.4% for all of last year.
Jolly Roger Activist Fund was up 4% for the first five months of 2007.
Meanwhile, two more of the firm�s staffers recently departed: risk manager Mark Smith, who left about a month ago, and Glenn Haberfield, who was laid off after his fixed-income trading position was eliminated. The firm had done little or no bond trading over the past six months. Smith and Haberfield have not yet landed new jobs.
Pirate's largest position, by far, is Brink's Company. Speculation is rampant that there will be significant selling pressure on Brink's stock in the coming weeks.