Star manager Coffey quits GLG
Greg Coffey has quit UK hedge fund manager GLG Partners but has agreed to stay for six months to ease the transition to a replacement manager for his funds, which account for more than a quarter of GLG's total $25bn (€16bn) assets under management.
GLG said it had accepted Coffey's resignation, which he had tendered then withdrew last week. It said Coffey would continue to run the four emerging markets funds he manges and would help in selecting someone to replace him.
A spokesman for GLG said: "Greg will forfeit all of his unvested shares and unvested cash awarded to him under the company’s equity participation and long term incentive plan."
A source close to the situation said Coffey and GLG's negotiations last week included discussions about clauses in his contract constraining his ability to compete with GLG and to solicit capital from GLG's clients. This and two other sources close to Coffey said he wanted to set up on his own. One of the sources said GLG is expecting that not all the investors will eventually redeem from GLG and reinvest their capital with Coffey.
GLG Partners' shares, which trade on the New York Stock Exchange, have fallen 0.4% since this morning to $9 a share at 16.18pm British Summer Time.
Coffey generated a net investment return of 68.58% a year on average between the start of 2004 and the end of 2007, according to investors in GLG's funds. The average hedge fund manager investing in emerging markets has generated a net return of 22.29% over the same period, according to figures published by data provider Hedge Fund Research.
GLG's limited partners - its senior traders and executive staff, including Coffey - collectively took a profit share of $401m last year, according to GLG's financial statements. The four funds run by Coffey contributed about half of the $679m performance fees charged by the firm in total last year, according to sources close to the situation, and are thought to have contributed more than a quarter of the $287m management fees, on the basis that his funds accounted for more than a quarter of the firm's total assets.
The GLG emerging markets fund invests in equities, government and corporate bonds and currencies in emerging markets and by the end of last year had become GLG's single largest fund, with $5bn of assets under management. Coffey runs three other funds - GLG emerging markets special situations, GLG emerging markets currency and fixed income and GLG emerging equity fund - which together comprise another $2bn of assets under management.
The emerging markets fund charged a management fee of 2.5% a year of assets under management, and a performance fee of 25% of any capital gains, according to a performance document published by GLG. This is in line with GLG's other hedge funds, but its long-only funds and funds of funds charge lower fees.
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