Third Avenue Management said CEO David M. Barse is leaving, days after he announced that a credit mutual fund would halt redemptions to allow for an orderly liquidation.
Mr. Barse and the firm have “mutually agreed” to part ways, effective Monday, the money manager said in a statement. Third Avenue will be led by the firm's management committee, according to the statement.
Third Avenue rattled credit markets after telling investors Dec. 9, in a letter signed by Mr. Barse, that its Focused Credit Fund was halting redemptions and would conduct an orderly liquidation of remaining assets. Such measures are rare among mutual funds, which are strictly regulated and required to provide investors with liquidity on a daily basis.
The Focused Credit Fund had $788.5 million in assets at the time the shutdown was announced, down from $3.5 billion in June of last year, according to data compiled by Bloomberg. Shares of money managers — including Affiliated Managers Group, which owns a portion of Third Avenue — slid after last week's announcement.
Also on Monday, Massachusetts said it's investigating the closure of the Third Avenue Focused Credit Fund.
The Massachusetts Securities Division sent out a subpoena Monday to probe the fund closure and the liquidation plan, according to a statement by Secretary of the Commonwealth William F. Galvin.
“My office is opening this investigation to determine when and how this decision was made and to determine the extent of Massachusetts investors who have been impacted by this unprecedented decision on the part of fund management,” Galvin said in the statement.
The Third Avenue liquidation announcement was followed on Monday by Lucidus Capital Partners, a high-yield credit fund founded in 2009 by former employees of Bruce Kovner's Caxton Associates, announcing it liquidated its entire portfolio and plans to return the $900 million it has under management to investors next month, according to a statement from the London-based company.
“The fund has exited all investments,” CEO Christon Burrows and Chief Investment Officer Geoffrey Sherry said in the statement obtained by Bloomberg. “We would like to thank our investors and counterparties for their support over the years."
Another high-yield fund, a $400 million hedge fund managed by Stone Lion Capital Partners, suspended redemptions last week to avoid unloading securities at fire-sale prices, fueling jitters in the market for risky debt. The SPDR Barclays High Yield Bond ETF, a proxy for the junk bond market, fell 2% on Dec. 11, the most in four years.
