English: Man Group Logo (Photo credit: Wikipedia)
In 2008, Emmanuel "Manny" Roman, the co-chief executive of hedge fund firm GLG Partners, showed up to a conference of hedge fund managers and predicted that at least 25% of the world’s hedge funds would disappear “in a Darwinian process.”
Less than two years later, Roman sold GLG to Man Group, the world’s biggest publicly-traded hedge fund, for $1.6 billion. It was the signature move made by Man Group CEO Peter Clarke, who was looking for a way to increase growth. The deal eliminated a major independent hedge fund firm, GLG, whose three top bosses, including Roman, received hundreds of millions of dollars of Man Groups stock, which they agreed not to sell for at least two years. At the time, Clarke said that the underperformance of AHL, Man Group’s massive computer driven fund, had “not one jot” of influence over the decision to purchase GLG.
On Monday Man Group announced that Clarke’s time as CEO of the company was coming to an end. Since purchasing GLG, Man Group’s stock is down by 60% and AHL has a lot to do with the misery. AHL has continued to struggle, with disappointing performance and plenty of investor outflows. Roman and the other two principals at GLG are sitting on more than $200 million of paper losses.
Starting in February, Roman will take over as CEO of Man Group and will try to turnaround the disaster at Man Group that has impacted Roman’s personal fortunes. “These are tough times for the asset management industry,” Roman said in a statement on Monday.
You better believe it. Hedge funds are getting crushed in 2012. For the second straight year the average hedge fund is getting trounced by the market. The Lyxor hedge fund index, for example, is up 1.98% so far this year while the S&P 500 index fund has returned nearly 15%. If the 2 and 20 crowd don’t turn things around soon, Roman’s 2008 prediction might seem very prophetic.
