GAM Fund Liquidations Sends Shares Down as Credibility Seen Hit

(Bloomberg) -- GAM Holding AG shares continued their slide after the Swiss asset manager said it would liquidate some funds run by suspended manager Tim Haywood.

The stock fell as much as 5.7 percent in Zurich, their third straight day of declines, as investors reacted to the loss of around $7.3 billion in assets from winding down some funds announced late Friday and associated management fees from managing those funds. GAM has lost almost half of its market value this year.

“The credibility of GAM’s management remains impaired,” Zuercher Kantonalbank analyst Michael Kunz wrote in a note to clients. “The accusations against Haywood -- or what GAM has communicated on the matter -- still sound too harmless, really than to warrant rubbing out an entire investment strategy arm,” Kunz wrote, adding that the shares are likely to continue to struggle.

GAM, which has a market capitalization of around 1.4 billion Swiss francs ($1.41 billion), stunned investors late last month with its suspension of Haywood after alleged lapses of due diligence and breaches of some policies. The firm at the time froze redemptions from funds run by Haywood, who oversaw one of the firm’s largest investment strategies that in total housed about 11 billion Swiss francs in assets.

The money manager has alleged that Haywood signed contracts alone where two signatures were required, breached the company’s gifts and entertainment policy by not seeking the required pre-approval and used his own personal email for work.

The boards of directors of the funds on Friday determined that the money pools -- all part of Haywood’s absolute return strategy -- should go into liquidation. GAM didn’t say when it expects the liquidation to be concluded.

“In the shorter term, we expect the muted investor sentiment to prevail, which will make it difficult for the shares to outperform,” Baader Helvea analyst Tomasz Grzelak said in a note to clients. The asset manager will likely have to take additional cost saving measures to at least partially offset negative impact of the loss of Haywood’s funds, he said.

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