Vikram Pandit's Amazing Disappearing Hedge Fund

Eric Dash reports that investors in Vikram Pandit's Old Lane funds redeemed "substantially all" of their funds when they were given the opportunity in late March. Old Lane, which had $4.5 billion in funds under management last year, is now down to just $1.5 billion - and that money belongs to Citigroup, Pandit, and other Old Lane principals.

And yet the $800 million that Citi paid for the firm has been written down by just 25%, which doesn't sound very realistic to me. Old Lane was a duff investment, and Pandit should be extremely embarrassed by its performance. Any other executive who presided over such an atrociously-performing business line would have been fired; Pandit, astonishingly, got promoted to CEO of the whole shebang. I don't doubt that he might do better at Citigroup than he did at Old Lane - after all, he can hardly do much worse. But his public statements on the subject of Old Lane, when he's finally forced to make them, are going to be extremely interesting.

Comments

[User 68127:]

Another example of Citi's disregard for its shareholders. $800 million of shareholder money transferred into Vik's pocket. And, like the Federal government, those who fail are rewarded with more and more responsibility in order to "fix" what they themselves have broken. Even at $26 C is still a short. Is there anything that they do that does not destroy value?

2008 May 05 02:26 PM

[Healthy:]

This is not simply embarrassing for anyone, but it's a disgusting revelation of insider-dealing whereby the owners of the stock in Citicorp get shafted time after time. The deal whereby Pandit was so overpaid paid for this garbage fund should be called back, and he should get nothing. And he should get fired from Citigroup. Every board member should get fired from this stupid company, too. The same crap goes on year after year. I can see Citicorp going out of business and investors losing every dollar they've invested in the stock.

2008 May 05 03:38 PM

[Old Timer 1:]

How anyone can have faith in this executive or the Board of Directors that selected him is beyond my imagination! My only hope is that sooner or later the institutions that own the stock will force them to be accountable for their actions.

2008 May 05 10:22 PM

[venividivici:]

Great letters! It is breathtaking that the shareholders, particularly the institutional investors, allow this pathetic company to get away with the same rubbish again and again.

How can you have the slightest sympathy for any of them?

2008 May 06 04:59 AM

[BlackSwan:]

Where's the tort (maybe criminal) bar when you need them? All of this goes 'way beyond incompetence, their performance is criminal! And, nobody seems to care.

2008 May 06 11:32 AM