With the result of October 27 shareholder votes on restructuring plans for four of its funds looming, Absolute Capital Management has announced that its Absolute Germany Fund has lifted the suspension of calculation of its net asset value with immediate effect and will reopen to normal subscriptions and redemptions.
NAV calculation was suspended on September 20 after the sudden resignation of Absolute Capital's co-founder and co-chief investment officer Florian Homm prompted a flood of redemption requests to the firm's eight equity hedge funds and an 80 per cent collapse in its share price within three days.
Subsequently subscriptions and redemptions for five of the funds, including Absolute Germany, were suspended and a restructuring plan for four of them drawn up after Absolute Capital announced that a significant proportion of the funds' assets were invested in illiquid and hard to value US small cap stocks.
At the end of August 2007, the Absolute Germany Fund's net assets stood at USD381m, and its cumulative return since launch in January 2004 was 91.69 per cent. Absolute Capital says it expects that the fund's administrator, Fortis Prime Fund Solutions (IOM), will release the fund's official NAV figure for September 30 concurrently with that of October 31 during the third week of November.
The fund will henceforth will be managed by Jens Peters and Antonio Porsia, replacing Stefan Heieck and Frank Siebrecht, who resigned from the company earlier this month citing personal reasons. Absolute Capital says Peters, a German national, has an excellent investment track record with its event-driven and Absolute India funds, while Porsia is the lead manager for the Absolute Large Cap and Absolute Return Europe funds.
Both Peters and Porsia have in-depth knowledge and expertise in the German investment market and in particular the large cap sector, the firm says. Their focus will be on generating absolute performance with an investment bias toward German large cap stocks; realisable liquidity will remain a key investment criterion for the fund.
'Despite recent events and the fund's recent negative performance which was attributable in large part to the events following Mr. Homm's resignation, the fund is on a solid footing and is well positioned to take advantage of favourable trading conditions resulting from the resurgent German economy through 2008,' Absolute Capital says.
Chief executive Jonathan Treacher adds: 'The events of the past five weeks have been tough on all of the company's investors, including those invested in the Absolute Germany Fund. Though the fund was only very minimally invested in the illiquid positions, it was caught in the downdraft brought on by the sudden and unexpected resignation of Florian Homm.
'We fully expect that the fund will recover from its recent negative performance and that investors who stay invested in the fund will be rewarded in the months ahead. I have full confidence in Jens Peters and Antonio Porsia, both of whom have proven themselves to be talented managers, and have performed admirably through this challenging period.'