Coast Asset Management is getting out of the hedge funds-of-funds business to concentrate on its flagship fixed-income arbitrage hedge fund strategy, confirmed Richard Chimberg, a company spokesman, in an interview.
Coast Asset has found a buyer — which Mr. Chimberg declined to identify — for the funds-of-funds unit. Existing investors in the Coast Diversified Fund Family of Funds, which total $295 million, have agreed to the deal, which is expected to close within a few weeks.
Industry sources who asked not to be named identified Cantor Fitzgerald & Co. as the acquirer. Neither Sandra Lee nor Carrie Walker, Cantor Fitzgerald spokeswomen, returned calls seeking confirmation of the acquisition.
About 88% of CAM's hedge funds-of-funds assets and 99% of the $335 million CAM manages in its fixed-income hedge fund strategy and structured products business are from institutions, Mr. Chimberg said.
David E. Smith, president and CEO of CAM, was unavailable for comment about the firm's reasons for exiting the hedge funds-of-funds arena, Mr. Chimberg said.
A consultant who asked for anonymity said there was “no surprise at all” that Coast is “offloading assets in order to concentrate on its primary core investment approach.” An investment banker who also asked not to be named said the decision to shed a business that has been shrinking rather than growing is not unexpected.
According to CAM's most recent SEC ADV form, dated Nov. 23, 2011, assets managed by the firm have been declining. As of Dec. 31, 2010, assets under management totaled $1.2 billion, but AUM had fallen to $776 million in November 2011. Assets currently total $630 million.