Basso hedge fund to staff: be excellent or be gone
NEW YORK, Aug 1 (Reuters) - Basso Capital, the $2.8 billion hedge fund founded by convertible arbitrage trader Howard Fischer, is putting more pressure on staff members after facing losses in all three strategies this year, according to an investor letter.
Fischer said his management team has discussed proposing that "the ideal employee" should come to work with the idea that "if I am not excellent today, I may lose my job."
"I have made it clear to certain members of the investment team that they need to achieve certain quantitative goals to warrant the retention of their seat on the trading room and position within Basso," said Fischer, 49, in the letter.
The July 25 letter reflects the pressure facing many hedge funds as performance suffers amid market turbulence of the past year, prompting investors to pull back and funds to close.
Fischer, an avid bicyclist, compared the current markets to his recent strenuous race up New Hampshire's Mt. Washington, dubbed "the longest and steepest bike race in the world."
"At Basso, we are moving ahead uphill, fighting hard all the way while gravity tries to pull us back down, fighting the potential negative return impact of credit spreads, housing prices, equity valuations, convertible premiums, etc.," he told investors in the letter, which was obtained by Reuters.
Basso, which was founded in 1994 in partnership with an American International Group Inc (AIG.N) affiliate, declined to comment.
Basso said it posted losses of 2.2 percent in June in its multi-strategy portfolio, its largest, giving it first-half losses of 1.6 percent in that fund. Its convertible bond strategy posted losses of 1.85 percent in June, giving it first-half losses of 2.6 percent, according to the letter.
Basso's performance exceeded hedge fund averages compiled by industry tracker Hedge Fund Research. HFR's multi-strategy index posted losses of 2.4 percent in the first half, while its convertible arbitrage index fell 7.6 percent in that period.
The firm said it continues to attract new money to its strategies and that it believes its losses are "disappointing," but "surmountable."
"With all the funds that we see throwing up gates on redemptions, suspending redemptions and/or shutting down, we understand the consequences of failing," said Fischer, who previous ran the convertibles trading desk at Smith Barney, the investment bank that merged with Salomon Brothers and later Citigroup. (Reporting by Dane Hamilton; Editing by Derek Caney) (dane.hamilton@thomsonreuters.com. 646 223 6161)
