The latest big news about FrontPoint Partners really devastating for the firm.First of all, Steve Eisman, the fund’s star manager, basically announced that he’s leaving the fund. It’s apparently still a “maybe,” but he told the Wall Street Journal…
“At this point in my career, I want to have more control over my destiny.”
… which sounds like a definite, I’m outta here, to us.
It’s bad for FrontPoint because as of this summer, Eisman’s fund was practically the only one performing well, we were told by a source.
Second of all, instead of spinning off from Morgan Stanley, which FrontPoint planned to do very soon, the fund might close altogether.
The two pieces of news are probably related. Eisman is the biggest draw for investors, so if he leaves, it means big redemptions.
And apparently whether or not the firm closes will hinge on how many redemptions hit the fund. FrontPoint used to manage $7 billion. Now it manages $3.5 ($4.5 if you count the new $1 billion fund it just launched), down $3 billion from this summer.
From the Wall Street Journal:
If this quarter’s redemptions are enough to threaten FrontPoint’s viability, Morgan Stanley could opt to close FrontPoint funds rather than spin out the business.
All of this is on top of the scandal the fund faced this fall when Chip Skowron, the firm’s healthcare fund manager, became ensnared in the most recent insider trading scandal.
Quick – someone snag CEO Mike Kelly. We hear he’s a sweetheart.