Loomis, Sayles & Co. LP has lost at least $884 million in assets from clients because of staff departures and subsequent changes in portfolio styles. The losses followed the company's wide-reaching reorganization last year.
Two of the lost accounts were core bond portfolios run by Rahim Manji, who left Loomis' San Francisco office in June and is now a managing director with NWQ Investment Management Co. in Los Angeles.
Loomis was terminated by the Huntington Memorial Hospital Foundation in August and the charitable trust and endowment for the Henry E. Huntington Library, Art Collections and Botanical Gardens, Pasadena, Calif., in June.
Mr. Manji ran $60 million in domestic fixed income for the hospital's trust and its operating budget, and $46 million for the library.
Pacific Investment Management Co. is liquidating the hospital account and will run two-thirds of the remaining assets, said Tim Carmack, chief financial officer for the hospital. The trustees hired Bradford & Marzec Inc. to run the remaining third.
But PIMCO is having trouble selling the portfolio's securities, Mr. Carmack said. He described the portfolio as "illiquid," particularly its mortgage-backed securities. Some assets are selling 40 cents to 50 cents on the dollar, he said. PIMCO would not comment on the matter.
The board made the switch because of poor returns and changes at Loomis, Mr. Carmack said. Board members were left with questions about Loomis' reorganization. Richard Rezec took over the hospital's account in June. He nearly persuaded the fund to stick with Loomis, Mr. Carmack added.
Margaret Clough, a Loomis spokeswoman, said that during last year's reorganization, a change was made in the supervision of its core bond team. All core bond managers such as Mr. Manji once reported to the local managing partner. Now core bond managers report directly to Michael Millhouse, managing director and chief investment officer, in Chicago. The change, she said, helped better organize investment processes such as trading.
"Almost all our clients were behind the change," she said.
The Henry E. Huntington trust and endowment terminated its contract with Loomis because of Mr. Manji's departure and because Loomis stopped offering the sector-oriented bond strategy the trust had used before the reorganization, said Alison Sowden, vice president, financial affairs. In June, the trust hired PIMCO to replace Loomis. Mr. Manji declined to comment on either portfolio.
Loomis has seen bigger accounts walk in the wake of the changes. In the spring, it lost a $778 million balanced account portfolio of the Arkansas State Highway Employees Retirement System, Little Rock, to CastleArk Management, a Chicago-based firm started earlier this year by three former Loomis executives, Jerome Castellini, Scott Pape and Edward Clark.
Mr. Castellini had been a vice president and managing partner, while Messrs. Pape, Clark and Manji had been vice presidents.
But Loomis is still growing despite the pains from its reshuffling. The Boston-based bond power house is up $1 billion in net assets for the year. It manages $70 billion.
