The collapse of Third Avenue’s Focused Credit Fund jolted Wall Street and renewed worries about the difficulty of trading securities on the U.S. bond marketplace. New York-primarily based Third Avenue is a relatively modest investment manager with fund assets that totaled $ ten billion at the beginning of the year.
A security guard at Third Avenue’s headquarters said on Sunday that Barse had been let go and was not allowed back in the creating, the Wall Street Journal reported.
A Third Avenue representative declined to comment. Barse did not respond to calls. His function e mail bounced back with the message “undeliverable”.
Third Avenue’s Focused Credit Fund was overwhelmed with heavy losses and surging investor net withdrawals, forcing Barse to abruptly liquidate the fund and block redemptions.
The redemptions and losses more than the previous year cut the size of the Third Avenue Focused Credit Fund to $ 789 million from almost $ three billion. Run by Tom Lapointe, the fund bet on distressed situations, such as the bankruptcy-related claims of Lehman Brothers. In a letter to investors last year, Lapointe, who could not immediately be reached for comment, stated distressed assets in his portfolio had been not necessarily illiquid or hard to trade.
The fund’s collapse is a blow to the reputation of Third Avenue Founder Marty Whitman, regarded the dean of American vulture investing. He hired Barse in 1991 to oversee the firm’s operations so he could spend much more time pursuing his own investment techniques.
Whitman could not be reached for comment.
The blow-up of the Focused Credit Fund was the most significant mutual fund failure considering that the economic crisis. The fund’s collapse shows the dangers of loading up on risky assets that are tough to trade even in excellent instances.
Just before Barse, 53, joined Third Avenue, he worked as a bankruptcy attorney defending the rights of creditors. He had been CEO of Third Avenue because 2003.
Whitman was a leader in a strategy that includes bets on the outcomes of businesses going via bankruptcy and other distressed conditions. The 91-year-old’s book titled “Distress Investing” distills decades of understanding about the ins and outs of bankruptcy restructuring.
In 2002, Affiliated Managers Group Inc purchased a majority equity stake in Third Avenue, with the remaining portion held by a broad group of workers that incorporated Whitman and Barse. Third Avenue, nonetheless, continued to operate autonomously from AMG, which holds stakes in a quantity of boutique asset management firms. AMG could not quickly be reached for comment.
(Reporting by Sam Forgione, Tim McLaughlin and Ross Kerber editing by Grant McCool)