The saga over Absolute Capital Management deepens, as the FT’s Chris Hughes notes in Tuesday’s Lombard column. Florian Homm, the flamboyant former head of AbCap, “went from hero to zero” when he quit the company last week. The surprise departure of the Majorca-based hedge fund whizz prompted the asset manager’s shares to plummet.
Homm made a drama out of the crisis by issuing an open letter lambasting the company’s top brass and vowing to fight for shareholder value, notes Hughes.
Investors could be forgiven for thinking that Mr Homm was aligning himself with their interests in making such a statement. “But his actions speak otherwise,” says Hughes. Mr Homm has been cutting his losses. On Friday, he sold his stake in AbCap for just 9 per cent of what it was worth a week ago.
Mr Homm no longer has a direct financial incentive to restore value to AbCap. But his withdrawal may be for the best. His latest investment technique was to stuff the equity hedge funds he ran with illiquid US micro-cap companies. Perhaps, concludes Hughes, “a better way to boost AbCap’s shares now is for there to be some distance between the company and its basketball-playing former star”.
As FT Alphaville’s Markets Live team observed in its Monday live discussion, “continuing to fight for shareholder value” in Homm-speak obviously means selling 10m shares at 35p. What’s more, noted FT Alphaville, it is being done via Homm’s Leichtenstein-based personal vehicle, CSI Asset Management – and no, that wasn’t made up.