Hedge Funds

Hedge fund NewSmith pays members 29 million pounds

LONDON (Reuters) - London-based hedge fund firm NewSmith paid its senior staff 29.4 million pounds last year despite some of its investments running into trouble during a volatile year for markets.

NewSmith, one of the hedge fund firms to appear before a parliamentary committee investigating the UK banking crisis in January, wrote down the value of its listed and private equity investments, particularly in Asia, by 7 million pounds, recently released accounts for the year to the end of November 2008 showed.

This included a 3.3 million pound writedown on its holding in FibreChem Technologies FIBR.SI, whose shares were suspended from trading over alleged accounting irregularities

The firm also saw profits on sales from its investment portfolio fall to just 100,000 pounds from 7.4 million pounds the previous year.

The firm’s payouts, which were down from 37.3 million pounds, went to members of the partnership of NewSmith Capital Partners LLP, and to members of its subsidiaries.

Income from NewSmith’s hedge funds, 81 percent of which made money in 2008 after taking a cautious approach and betting on falling prices, rose slightly, while the funds saw no net redemptions from clients.

“I felt the asset management business, given what happened to the world last year, held up well,” founding partner Michael Marks told Reuters on Wednesday.

NewSmith’s experience is in stark contrast to many firms in of the $1.4 trillion hedge fund industry, which had its toughest year on record in 2008, with performance losses of about 19 percent and widespread client demands to withdraw cash.

The group’s profits were also lower after NewSmith sold its debt advisory unit to Unicredit Group.

Hedge fund firms are usually very secretive about their profits and details of payouts to executives are notoriously hard to track.

The FTSE 100 .FTSE has rebounded by approximately a half from its March lows, but Marks said the firm is now taking a more cautious approach.

“I think markets probably need a bit of a breather,” he said. “We’re probably less bullish than most.”

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