City stars humbled as meltdown hits Mr Sub-prime
Holly Watt and Louise Armitstead
THE multi-millionaire financier Martin Finegold, dubbed Britain’s “Mr Sub-prime”, has become one of the biggest public losers in the market meltdown.
His loss follows the near collapse of one of his quoted hedge funds, Caliber Global Investment. This fund, which is now worth only $40m (£20m), is heavily exposed to sub-prime mortgages in America.
The group’s net asset value, which is made up of asset-backed securities, has potentially lost 85% of its value, and shareholders are being asked to wind it up. The share price has fallen from $10 to $1.60 per share.
Caliber’s shareholder register reveals a list of City luminaries who have suffered substantial losses from their investment. Among them are Caspar and Ann McDonald-Hall, who made an £80m fortune from property. They face writing off more than £2m.
Other smaller investors who stand to lose money are Bryan Rankin, a former chairman of Murray Financial Corporation, Philip Peasley and Tony Hall, a director of the firm, who invested $450,000.
Some of the big investment houses such as Lehman Brothers and Man Financial also stand to lose heavily, but most of the individual investors are hidden behind nominee accounts.
Finegold, with other directors and family friends, invested $8.5m in Caliber, but this holding, held in a vehicle called Relibac, is now worth a fraction of what it was when the hedge fund listed. Finegold is a large investor in Relibac.
Caliber is one of several funds managed by Cambridge Place, an alternative asset manager with some $10 billion under management. This is the only fund listed, but it has been the worst performer. The assets stand at $820m against liabilities of $760m.
Caliber says it is not a forced seller and if it is wound up its assets will be sold over the next year.
Finegold made his fortune setting up Kensington, a specialist mortgage group that provides loans to people with unusual credit histories. He set up Cambridge Place with Goldman Sachs banker Robert Kramer in 2002.
The losses faced by Caliber investors only scratch the surface of the wider calamity in financial markets. Data from banks and other sources seen by The Sunday Times show that by the middle of August hedge funds around the world were having their worst month on record.
Hedge Fund Research Indices (HFRX) showed that every trading strategy was showing losses from August 1 to August 21. The worst-performing was HFRX Macro which was down 9.8%.
At the beginning of last week, some of the world’s best-performing hedge funds were suffering, including Atticus European, down 14.45%, KDA Capital European, down 10.34%, Lansdowne UK Equity, down 12.73%, and Tosca Long Fund, down 11.26%.
One hedge fund of funds manager said: “We’ve never seen such heavy losses in such a short space of time. It has been brutal and caught many managers out.”
Some of the worst-hit funds invested to shore up loss-making positions. Some of the world’s biggest quant-fund managers are said to have injected $20 billion into funds rather than cut positions they believed in.
Following the lead of Goldman Sachs, which two weeks ago put $3 billion into its Global Equity Opportunities when it was down 30%, other quant funds, including Renaissance, DE Shaw and AQR, are thought to have poured in up to $1 billion to maintain positions.
Last week there were signs of recovery. Insiders said the Global Equity Opportunities Fund rose 12%. The $29 billion Renaissance Institutional Equities Fund is believed to have recovered from being about 10% down to just 1%. AQR is also thought to have shown a strong recovery. |
