LONDON (Reuters) - Hedge fund firm Polar Capital reported a fall in assets but has seen net inflows in recent months and said on Wednesday it was looking “more aggressively” at buying firms in distress.
Polar (POLR.L) said assets under management fell to $1.54 billion (928 million pounds) at end-May from $3.1 billion at end-March 2008, although there has been a small rise since the end of March this year.
Chief executive Mark Kary told Reuters the firm had seen “small net inflows” since end-March, particularly into its global macro strategy and European long/short equity funds.
“Ever since (the Reuters Hedge Fund & Private Equity Summit in) March, we’ve seen hardly any new redemptions... There’s been a pick-up in visibility and there’s a lot of meetings (with potential investors) going on,” he said in an interview.
Kary told the Reuters Summit on March 23 he did not foresee another wave of redemptions by clients.
The drop in assets comes as the $1.3 trillion hedge fund industry goes through its toughest ever challenge. Last year funds across the industry lost 19 percent on average, although Polar said five out of its seven hedge funds made money.
During the year to March Polar saw $170 million of outflows from its hedge funds, in addition to $992 million of outflows from funds it closed, which included the Paragon fund following the resignation of manager Julian Barnett.
Pretax profit fell 17 percent to 12.1 million pounds. Kary said the large fall in assets “implies a material reduction in our core revenues” and said this year’s results will depend more on performance fees and net inflows.
Polar has cash and investments of 44.2 million pounds, and Kary said while Polar would prefer to hire individual managers, it saw more opportunities for acquisitions than a year ago.
“There are some high quality organisations that because of last year and... what went on in markets are in some distress and which you could buy on more attractive terms than a year ago,” he said.
“There are more opportunities at the moment and perhaps we are looking more aggressively.”
The AIM-listed group’s shares were up 2.7 percent at 58 pence by 10:20 a.m., continuing a rally which has seen the company’s stock recover from lows of 32 pence in March.
Kary said the recent recovery in markets -- which saw the FTSE 100 .FTSE rise from below 3,500 in March to more than 4,500 earlier this month -- was a bear market rally and he expected market conditions to remain tough.
“We think there will be difficult, volatile markets for the next two-to-three years,” he said. “It’s difficult to imagine making a lot of money in equity markets over the next two to three years.”
A second interim dividend of 3.5 pence will be paid, making a total for the year of 4.5 pence, compared with 8.5 pence a year ago.
Editing by Dan Lalor