New Star Asset Management Share Discussion Threads

[slj] 09/11/2008 11:26

Will Gilbert catch falling New Star?

Jeff Prestridge, Mail on Sunday
8 November 2008, 7:32pm

They are the heavyweights of the fund management market. But while New Star Asset Management boss John Duffield often chats with Martin Gilbert, head of Aberdeen Asset Management, over lunch in central London celebrity haunt Signor Sassi, the two may become even closer. Or so said gossips among their rivals at the industry's glittering get-together in Park Lane last week.

Six years ago, Gilbert, who now talks of 'carnage' in the sector, was at the centre of what became known as the split capital investment trust scandal, with MPs lambasting his lieutenant Chris Fishwick as the 'unacceptable face of the City' for his part in wiping out the investment portfolios of thousands of savers.

It was Gilbert's nadir. He was forced to bring Aberdeen to heel and pull the investment house out of retail fund management. Some said Aberdeen was doomed to fail and that Gilbert would go back to his beloved Scotland for good.

Meanwhile, the overweeningly confident Duffield and his recently formed investment house New Star was growing rapidly on the cult of the 'star' fund manager and was ready to benefit from

Aberdeen's near-demise. In early 2003, New Star doubledits assets under management to £3.8bn after buying six key Aberdeen funds. Later that year Duffield bought another £840m of assets under management from Gilbert. It was the trigger that would ultimately see New Star floated on the London stock market, making millionaires of many of its staff, from fund managers to secretaries and receptionist Zoe Shaw, then aged 31.

Yet today, while Aberdeen's star is again in the ascendant - with yacht-loving Gilbert, 53, having spent the past week in Japan talking over a potentially lucrative tieup with Mitsubishi - New Star's is all but extinguished.

The talk in fund management circles - and a theme of dinner table chatter at the Investment Management Association's lavish annual bash on Wednesday at the Grosvenor House Hotel in Park Lane - is whether Gilbert will have the last laugh by making an audacious bid for 69-year-old Duffield's battered and bruised New Star.

Just how battered and bruised New Star is, and therefore how vulnerable to a bid approach, will be revealed this week when it issues its latest trading statement.

On Friday, financial giant Citi predicted that assets under management will have fallen 14% in the last quarter to just over £17bn. It rates New Star 'high risk', though it says 'the share price is now up with events'.

Its share price has dived from just over £1 to 30p in two months. Its market capitalisation of just over £80m compares with Aberdeen's £674m.

Unlike other retail investment houses, such as Jupiter, New Star has been hit hard by fund redemptions on the back of dreadful performance by flagship funds.

New Star UK Growth - managed by Stephen Whittaker, who has more than 25 years' experience - has more than halved in value over the space of a year, while its Higher Income fund has fared little better. New Star has also lost key business, most notably the £1.4bn mandate to manage the assets of friendly society Family Assurance.

New Star was also one of the biggest proponents of commercial property as an investment for small savers, extravagantly promoting its UK property fund on the back of fabulous gains made by the sector from 2004 to 2006.

When the commercial property market peaked in mid-2007, New Star's UK fund was worth more than £2bn. Now it is worth half.

New Star is also saddled with £236m of debt. It is rumoured that stock market falls mean it has had to renegotiate the terms of its loan agreements with HBOS.

For Duffield a solution might be a rights issue or a part sale of New Star's business - its institutional or hedge fund operations, for example. But a sale to a rival such as Aberdeen could prove more tempting.

Last week Duffield was tightlipped, other than to say business was 'very difficult' as investors continued to flee equities, property and bonds (New Star's bread and butter) to go into cash.

Gilbert refused to confirm his interest in New Star but said he believed Duffield was 'keen to sell'.

If a deal is done, it would mark a remarkable return to retail fund management for Gilbert.

As for Duffield, as one rival chief executive told Financial Mail, it would merely act as a catalyst for him to set up a New Star mark two.

'Fund management and Duffield are intrinsically linked,' he said. 'Until death do them part.'

[whiterussians] 03/11/2008 12:13

The group has debts of about £220m covering five main banks, thought to include Royal Bank of Scotland and HBOS.

[whiterussians] 03/11/2008 12:12

talk of a rights issue

[macsam] 03/11/2008 11:46

Interesting article in Investment Week (issue 3rd Nov)suggesting that analysts claim that New Star is presenting a major bargin for potential buyers with speculation mounting that the Group could be sold as early as this week with Aberdeen touted as the frontrunner. Lets wait and see.

[slj] 30/10/2008 09:34

Thursday, 30th October 2008

John Duffield: Looking at further costcutting measures

SPECULATION was mounting last night that one of the City's best-known fund managers, New Star Asset Management, is seeking to restructure its bank lending covenants to stop them being breached.

New Star, founded and run by John Duffield, is also believed to be looking at further costcutting in a difficult climate for fund managers.

Up to 60 of its 430 staff are understood to have already left the company in the past year.

The group has debts of about £220m covering five main banks, thought to include Royal Bank of Scotland and HBOS.

One analyst said: "A key driver of value in the fund management sector is funds under management. If equities drop it impacts revenues.

"On that basis we estimate that when the FTSE 100 is between about 4,000 and 4,400 New Star could breach its banking covenants."

The Footsie closed last night up 280 points at 4,206. New Star's shares trod water at 29.75p against a 52-week high of 362p.

Another analyst said that if New Star did breach its covenants it could have to pay 1.5 per cent more interest on its loans "substantially raising costs, such that it could become loss-making".

The group's assets under management fell 14 per cent to £19.8 billion in the first six months of this year, while the interim dividend was slashed from 4p to 1p.

Duffield said at that time that conditions were difficult "and we do not expect them to improve in the immediate future".

However, another analyst said yesterday that using the FTSE 100 at 4,000 as a "proxy for when New Star could get into trouble with its covenants is too imprecise".

The analyst said this was because only about 50 per cent of New Star's investments were in equities, and such a measure "also assumes a static costbase when most fund managers must be looking to reduce their costs". New Star declined to comment.

[westcoastrich] 29/10/2008 23:43

5p target for me

[whiterussians] 15/10/2008 15:58

Does this co have any bank covenants? If FTSE goes down income drops then what?

[westcoastrich] 13/10/2008 17:11

Numis - Rights issue by NSAM needed

[utsushi] 04/10/2008 19:12

These toxic financial houses are made of cards when the performance fails, clients will follow each other out of the door and the good managers will go to, and don't wait for a "come back" tour either, it is very unlikely to happen.

[sprattyken] 04/10/2008 14:52

Index funds and etfs are the answer
NSAM is howver forging some links with distributors that may give them some dependable new business.

[careful] 04/10/2008 13:03

Duffield set this lot up, made a fortune, on the theory that there is such a thing as a star manager.
a number of overpaid clueless kids some of whom defied statistics with their poor performance on occasions.

the stock market is random, there is no such thing as a star manager. Inverstors such as Warren Buffet are judged over decades. Even the sage is having a tough time right now, and Berkshire have never paid a dividend..that distorts performance relative to the index over the longer term.

[sprattyken] 04/10/2008 12:37

I escaped with a very small loss a while ago. Glad I did.

[moob] 04/10/2008 09:13

well see 40p i feel in mi old bones

[utsushi] 03/10/2008 09:39

The only way to trade this is to follow the Directors sales/purchases.

Does that sad bloke in a raincoat still sit in the corner of Signor Sassi?

[sprattyken] 25/9/2008 16:03

Probably but just picked up a few of these bad boys. 12000 @ 72.25.

[moob] 17/9/2008 23:12

watched bloomberg said fund redemptions are at record highs

[undertaker] 15/9/2008 20:31

I hope the FSA are investigating this?!

[moob] 14/9/2008 08:35

Sundaty Times


New Star loses fund

New Star Asset Management has lost a £1.4 billion fund management mandate for the Family Assurance Friendly Society. It is understood that New Star lost the Family contract, consisting of children's investment trusts, to Abbey, a unit of the mortgage bank owned by Banco Santander, of Spain. The departure represents about 6 per cent of New Star's £19.1 billion assets. (Miles Costello)


Wonder if the director who sold 2 million had any idea?! Of course not, he is only the ceo.

[slj] 11/9/2008 23:31

New Star Asset Man Director/PDMR Shareholding
Date : 10/09/2008 @ 16:08
Source : UK Regulatory (RNS and others)
Stock : New Star Asset Man (NSAM)

Chief Executive Howard Covington sold 2,000,000 shares @ 100.6651p per share on 9th September 2008

[macsam] 11/9/2008 09:51

Could New Star be first on the list of targets for Clive Cowderys new venture that aims to target acquisitions in the financial services sector bearing in mind that John Tiner who will be heading the acquisitions team is also a director of New Star??? any thoughts.

[callumross] 29/8/2008 13:47

"Today's results were below expectations and analysts remain downbeat, expecting further price declines for the asset manager.

By mid January New Star shares appeared to have bottomed-out. Although its share price has ranged between 144p and 79p, today's 103p price is still 75% below the 420p peak reached at the end of November 2007.

Analysts at Citigroup remain negative, retaining a "Sell" recommendation and a 70p target price. Short-sellers appear to have the same view and have maintained a short position despite share price rallies."

[slj] 29/8/2008 10:38

New Star profit plunges 44% as redemptions soar

Friday 29th August 2008: 07:50By IFAonline.co.

UK New Star Asset Management suffered a 44% fall in operating profit in the first half of the year, as investors stripped approximately £1.1bn from its fund range.

Profit fell from £34m in H1 last year to just over £19m in the six months to 30 June, with revenue down 16% to £72.8m.

Amid what New Star chairman John Duffield labelled the "toughest stockmarket conditions for more than five years", the firm's total assets under management fell £3.3m to £19.8bn in the first half.

Net redemptions accounted for roughly £1.1bn of the decline, while market losses inflicted the remaining £2.2bn drop.

New Star's troubles have continued post H1, with AUM falling to £19.1bn at 27 August. The firm's international and UK mutual funds have continued to suffer net redemptions, with investors pulling a further £236m out of the range – mainly from the UK vehicles.

UK retail fund outflows hit £307m in the first half, helping to send New Star's UK range AUM down from £10.6bn at the start of the year to £9.3bn at 30 June.

The firm's Dublin-domiciled fund range was decimated during the six-month period, with a £402m net outflow driving its offshore AUM down to £534m. New Star's flagship European Growth fund suffered the bulk of the redemptions, despite improving recent results.

Duffield reiterated his previous stance on the firm's UK equity funds, saying performance "remained unsatisfactory".

The firm moved to strengthen this area in recent months – with Charles Deptford replacing Stephen Whittaker as Equity Income unit trust manager, Trevor Green handed control of equities in the Managed Distribution fund and merging the £28m Tri-Star unit trust into the £48m fund of funds Cautious portfolio.

"We expect to strengthen further our investment team," Duffield says. "We have made a number of changes to our retail investment funds during the year and we anticipate more changes as the year progresses."

[asmodeus] 29/8/2008 10:37

At first glance, it looks to me as if these results are nothing like as bad as those for Collins Stewart, if that's any comfort.

[callumross] 29/8/2008 09:37

the results are out, guys - just published elsewhere than advfn (investegate)

Net revenue falls 16% to £72.8 million (2007 £86.5 million)

* Operating earnings fall 37% to £30.3 million (2007 £48.1 million)
(before taxation, interest, exceptional items and amortisation of
intangibles)

* Operating earnings per share down 22% to 13.6p (2007 17.4p)
(before taxation, interest, exceptional items and amortisation of
intangibles)

* Assets under management down 14% over the six-month period to £19.8 billion

* Interim dividend of 1p per share (2007 4p)