GLG Partners, Inc. Q1 2008 Earnings Call Transcript

 |  About: GLG Partners Inc. (GLG)
by: SA Transcripts


Good day ladies and gentlemen and welcome to the first quarter 2008 GLG Partners Inc. earnings conference call. (Operator instructions) I would now like to turn the call over to Ms. Stephanie Linehan of Finsbury, please proceed ma’am.

Stephanie Linehan

Hello everyone and welcome to the GLG Partners investor and analyst conference call. On the call today from GLG Partners we have Noam Gottseman, Chairman of the Board and Co-CEO, Jeffrey Rojek, Chief Financial Officer, Simon White, Chief Operating Officer and Michael Hodes, Acting Director of Investor Relations.

Before I hand over the call I’d like to read a cautionary note, forward-looking statements. After our prepared remarks we’d be happy to take your questions. Earlier this morning we issued a press release announcing financial results for the first quarter 2008. I also want to point out that during the course of this conference call, we will make a number of forward-looking statements.

These forward-looking statements are subject to various risks and uncertainties and there are important factors that could cause actual outcomes to differ materially from these indicated [inaudible] statements. Some of these factors are described in the risk factors section of our filings with the SEC.

I want to remind you that GLG assumes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise unless requires by law.

I’d also like to remind everyone that GLG presents certain financial measures such as adjusted net income, pretax adjusted net income, non-GAAP weighted average fully diluted shares and non-GAAP compensation, benefit and profit sharing that are not prepared in accordance with US GAAP, in addition to financial results prepared in the course with GAAP.

GLG is providing these non-GAAP financial measures to enable investors, security analysts and other interested parties to perform additional financial analysis of GLG’s personnel related costs and its earnings from operations and believe they will be helpful to investors in understanding all components of the personnel related costs of GLG’s business.

A reconciliation of these non-GAAP financial measures to GAAP is included in our earnings release, a copy of which is available on our website and has been filed with our form 8-K filed this morning with the SEC.

Finally I’d like to point out that this is not intended to be an offer or solicitation for an investment in a particular fund. I will now hand it over to Noam for an overview of the quarter.

Noam Gottseman

Good morning. We’re pleased to have the opportunity to speak with you today and provide an update on our first quarter results and the performance across our funds. Our financial metrics were as follows. Our net AUM for the quarter stood at $24.6 billion, essentially unchanged from the year end 2007 level but up $8.6 billion or 53% year over year.

Our first quarter net inflows were positive at $0.77 billion versus $0.1 billion in the same period last year and do include flows from the US. The positive inflows for the quarter were offset by declines in performance. On a dollar weighted basis, we averaged a net decrease in performance of 5.1% across all our funds and a net decrease of 3.8% from our hedge funds.

With approximately 15% of our assets under management actually long only money, it is important to flag that the Morgan Stanley World Index was down 12.4% this quarter. The first quarter saw net revenues of $131.4 million, an 80% increase year over year. Adjusted net income was $33.8 million for the quarter, up 142% from the first quarter of 2007.

First quarter 2008 GAAP net income experienced a loss of $222.2 million. This loss was primarily the result of the recognition of the largely non-cash acquisition related compensation expense associated with our adverse acquisition transaction with Freedom Acquisition Holdings in November 2007, which reduced our GAAP net income by $260 million.

In terms of capital deployment, we have repurchased 14.3 million warrants to date. A total of 27% of the initial outstanding warrants have been eliminated through the combination of warrant repurchases and warrant conversions. We’re also pleased to announce that on April 21, 2008, we paid our first regular quarter dividend of $0.025 per share and going forward the Board of Directors will consider paying a special dividend based upon annual profitability.

In terms of US expansion, we remain on track. In late January we registered our US subsidiary GLG Inc. as the investment advisor with the SEC, a key step in our pursuit of the US alternative asset market and have already begun to see inflows.

We also expended our product range this quarter, launching four new funds. Our long term objectives remain unchanged, firstly to extend our 12 year record of leading investment performance, secondly to expand our products and strategies and thirdly to build on our success in Europe and the UK to penetrate other major markets, most notably the US, the Middle East and Asia.

I planned to spend some time addressing the events that have taken place over the last four weeks. In particular, the restatement of our financial statements, Greg Coffey’s departure, our year to date performance and the business and growth initiatives we’ve taken thus far this year.

But first let me pass you over to Jeff Rojek our CFO who will cover the financial results in a little more depth. Jeff joined us in March from KPMG where he had been an audit and advisory partner in the firm’s New York financial services business, spent over 15 years servicing global banking, investment banking and other related financial services clients.

Jeffrey Rojek

Thanks Noam. I’m pleased to announce that first quarter net revenues and other income were $131 million, up 80% over the same period a year ago. Adjusted net income was $34 million for the quarter, up 142% year over year.

Remind you, adjusted net income is a non-GAAP financial measure that we use internally to gauge the underlying performance of our business by deducting from GAAP net income cumulative dividends and adding back acquisition related compensation expense related to our reverse acquisition transaction with Freedom.

First quarter 2008 non-GAAP adjusted net income per non-GAAP weighted average fully diluted shares was $0.10 a share. Please note that over 90% of the acquisition related compensation expense excluded in this metric is non-cash. Further, any shares tied to share related compensation items linked to the acquisition have been included by management in our measure of non-GAAP weighted average fully diluted shares.

Non-GAAP weighted average fully diluted shares is a metric we use internally to measure the number of shares on which we expect to pay dividends plus the warrants outstanding under the treasury stock method. For the first quarter of 2008, we reported a GAAP net loss of $222 million. These GAAP numbers reflect $260 million of acquisition related compensation expense.

Going forward through the end of 2012, we expect to recognize under GAAP significant acquisition related compensation expense related to the reverse acquisition transaction with Freedom as the service requirements in those associated equity plans are met.

Performance fees for the first quarter were immaterial as it’s our practice to recognize performance fees when they crystallize, generally on June 30 and December 31 of each year. Small amounts, about $4.7 million in performance fees was generated this quarter which is up 88% from the same period last year as quarter two 2008 performance fees will largely reflect our cumulative first half performance.

The first quarter 2008 management administration fees totaled $121 million which is up 72.9% versus quarter one of 2007. This represents a margin of about 2% of average net AUM which is up 17 basis points on the same quarter last year. There continues to be a positive uptrend in net management and administration fees as it relates to net assets under management.

Our other income of $5.6 million reflects primarily the currency related gains on cash held on our balance sheet during the first quarter of 2008. Our GAAP employee compensation benefit and profit share for the first quarter of 2008 rose to $313 million compared to quarter one 2007’s $31.5 million.

These levels were significantly impacted by the acquisition related compensation expense following the reverse acquisition transaction with Freedom as well as the limited partner profit share arrangements for key personnel that were put in place in late quarter two of 2006.

We believe a more meaningful comparison is to look at the total GAAP compensation benefits and limited partner profit share which is excluding the acquisition related compensation expense or what we call non-GAAP CBP, a non-GAAP financial measure which management utilizes to measure the total cost of services provided to GLG by its employees and limited partners.

First quarter 2008 non-GAAP CBP rose 68% to $53 million, largely due to increased personnel to support the increase in the scale of the business. When measured as a percentage of net revenues, non-GAAP CBP fell by 290 basis points to 40% for the quarter year over year.

General admin and expenses increased 17.6% to $30.3 million versus quarter one of 2007. This reflects both the increase in the scale of the business as well as the impact of additional public company costs. Expressed as a percentage of revenues, G&A and other expense fell from 35.3% to approximately 23.1% for the quarter year over year.

First quarter 2008 net interest expense was $4 million reflecting the cost of borrowings under our term loan and revolving credit facilities, netted off versus interest income for the quarter. On an adjusted net income basis, the effective rate of tax for quarter one of 2008 was 23.4% versus and 18.9% for the same period last year.

The effective tax rate in first quarter of 08 is actually a bit higher than we expect it to be for the full year as there are a few beneficial items that will come into play in the fourth quarter of 2008 that are not being captured. That said, we expect to be at the high end of our previous guidance of 17-23% for 2008. The rate is higher than in previous years as our corporate structure has changed in November 2007 through our reverse acquisition transaction with Freedom.

In terms of capital deployment, we have spent $82.9 million through May 5, 2008, repurchasing 14.3 million of our publicly traded warrants leaving us with $117.1 million in our authorization, $100 million from the original authorization in November 2007 plus an additional $100 million which was announced on February 6, 2008. Please note that 5.5 million warrants have been exercised at $7.50 per share to date for an aggregate proceeds of $41.4 million.

As Noam mentioned, we commenced paying a regular quarterly dividend of $0.025 on April 21, 2008 and going forward the Board of Directors will consider paying a special dividend based on annual profitability. Before I turn the call back to Noam for some additional comments, I want to highlight that we’ve updated our investor presentation and it is currently available on our website, and has been filed today with the SEC on our form 8-K. Noam.

Noam Gottseman

Thanks Jeff. Before we open the call up to questions I wanted to comment on the events of the last four weeks, particularly as it pertains to the restatement of our financial statements, Greg Coffey’s departure, our year to date performance and the business and growth initiatives that we’ve taken thus far as well as some general observations.

First let me start with the restatement of our financial statements. The restatement reflects a change in interpretation as to how our limited partner profit share is presented under GAAP. It’s a particularly frustrating situation for us in that we manage our business thinking of limited partner distributions as an operating expense.

So in our very first public presentation and in every subsequent presentation, we have also had a non-GAAP slide which showed the limited partner distributions as an operating expense in our adjusted net income.

As a result, when it was decided last month that it was more appropriate to show the limited partner distributions as a GAAP operating expense, the impact was to better conform our GAAP financial statements to the way management managed the business and has guided investors with our non-GAAP metric which is adjusted net income.

The result, however, is that we needed to restate our financial statements. Obviously there’s no cash flow difference, there’s no impact to our adjusted net income but it has created an unnecessary distraction. Nonetheless, this matter has now been resolved and once again this has no economic effect on the company and no impact at all on adjusted net income.

There does remain, however, one large disconnect between GAAP and how we assess our business internally, which is the recognition of compensation related expenses associated with GLG’s reverse acquisition transaction with Freedom in November. Because of these expenses, even with healthy cash flows, we are likely to post GAAP losses for the next few years.

These acquisition related charges will run through our P&L for GAAP purposes until the end of 2012 but have no impact at all on our ongoing operating performance or our shares issued and outstanding.

The next issue is a bit more complicated which is Greg Coffey’s departure. Greg delivered his letter of resignation without any prior notification to management. I will not speculate on Greg’s reasoning, but regardless of what the motivations were, once we accepted that Greg wanted to leave, we moved quickly to ensure that first and foremost, the investors in the emerging market funds he manages would not suffer from a forced or hasty unwind of positions held by those funds in the likely event of meaningful redemptions following the announcement of his departure.

We negotiated to work with Greg in order to have him stay for a six month period to be able to best manage those funds, stem further losses, hopefully recoup a considerable amount of the losses suffered to date and most importantly affect an orderly unwind of positions which were put on by him and that he could best unwind.

The main emerging market fund has had a difficult couple of months. It was down 8% in March and it was already down an estimated 7% plus on April 14, the date Greg gave his initial resignation. It was down an estimated 13% on April 22 when Greg gave his final resignation and it ended the month of April down an estimated 14.3% to give a combined year to date estimated loss of just over 19%.

Since Greg’s departure was announced, redemption requests for the EM fund amount to approximately $1.7 billion. However, we expect a sizable portion of these to be deferred at least until Greg’s departure in October. We have communicated to fund investors and fund directors and have come up with what I think is a very good and effective way to have Greg look after the assets and be fully incentivized to manage the fund in the investor’s best interests.

Greg is a professional and is motivated to attempt to recoup these loses and to ensure that this is done in the best possible way. He is managing the money with the view to generate profits and to create liquidity and we have every confidence he will achieve that. It’s business as usual until his departure.

Also, as I mentioned, we have communicated with all the fund investors and have proposed a process and a procedure for redemptions which the Board of Directors of the fund considered and approved at their recent Board meetings. It’s a curious situation in that one of the main motivations which we had in going public was to be able to create a currency to attract and to retain our key people.

Obviously in this case it did not work. I would never have imagined that a few $100 million was an insufficient amount to retain somebody but this was the case here. I can tell you that our currency has certainly served to attract other top quality people to us and we’re confident it will continue to do so. We’ve already seen an impressive array of proposals from individual portfolio managers and teams within other firms as well as from companies that feel they might be able to help us with our needs.

We’re actively interviewing emerging market managers and macro managers as well as in other areas that we’re looking at, in particular credit and distressed. And we will continue to work on this. We obviously have a very considerable pool of shares and cash with which to attract and retain talent. We intend to use it judiciously and will use it in order to make the best investments for the future, both with our current employees and partners and future ones.

Now in terms of performance of our funds, year to date it’s clearly been disappointing. We were down a little over 1% coming out of February. March was a poor month for us as was April, especially with the very negative performance that we saw in the main emerging markets fund.

Year to date, we’re down an estimated 7% on a dollar weighted basis across all our funds and an estimated 7.6% on all our alternative funds. Just by way of reference, if you were to exclude the emerging markets from these performance numbers in April, our alternative asset funds were down an estimated 0.3% in April, and our long only funds were up an estimated 4.9%.

And our total performance for all our funds was up 1.3%. Additionally, one excludes for reference the main EM fund on a year to date basis through April, that brings all our funds to down 4.2% and our alternative funds to down 3.4%. The main emerging markets fund has obviously been a very strong performer for the last three years, but it clearly has hurt our overall performance year to date.

Having said that, several of our products are doing very well and we are performance fee positive. Our equity franchise is performing well in relative terms with long only’s beating their benchmarks and our equity long shorts are broadly fairing well, notable examples include our S3 quantitative long short fund, our European long short fund and our alpha select fund which is principally a UK long short fund that has actually been among the best performers in the European arena with the performance in excess of 10% year to date.

And one of our latest launches, the global mining fund has also recorded strongly positive returns since inception in January. Some of our funds are currently below their high water mark and the amount required to recover this performance and therefore start to generate performance fees are significant in some cases.

The most significant being the main emerging markets fund where as of April 30, the fund would need to recover approximately $882 million before it starts to generate performance fees. This overhang will hopefully be resolved by both positive performance to the extent we’re able to generate it in the next six months and also from the fact that as people redeem, the absolute dollar amounts of the high water mark will decline.

As you know, our funds are not linked, to the effect that any funds may be below its high water mark does not detract from another fund being able to generate performance fees. On the year to date performance I think it’s important to note that we’ve gone through an extraordinary four months in the market. The volatility has been intense, the correlation among asset classes as unusually elevated and we’ve had unprecedented moves.

We’ve had investment banks being bailed out by the Fed, we’ve had financial institutions being bailed out by the UK treasury and by other European central banks and we don’t believe all the trouble is over, nor that all the full impact has been felt, although clearly there’s been a very big injection of liquidity.

It’s important to realize that some of the impact, specifically in the US credit market from the Fed’s establishment of the term securities lending facility has enabled primary dealers to get liquidity by posting securities with the Fed and has allowed those dealers to unwind many of their hedges.

The hedges as a result have gone sharply higher and credit spreads on those hedges have tightened very considerably while the underlying assets haven’t really moved that much. If you think about what that does to hedge funds, which were not able to post securities with the Fed in the same way, they’re still sitting on the securities which haven’t really moved that much but meanwhile their hedges have rallied very strongly against them.

That largely describes what happened when I look at the performance of the credit related parts of our funds. In the main emerging market fund in April, we made money in equities, we made money in commodities, we’re essentially flat in foreign exchange but the vast and overwhelming amount of losses were sustained through the credit and local market rate books.

Credit strategies suffered due to mismatches on credit, hedges, as well as directional bias. And in rates, a short rate position was clearly wrong in the face of an increasing perception that the aggressive nature of the Fed rate cut decisions was coming to an end. Moving on to business initiatives, our registration in the US as an investment advisor became effective in late January and we have started our campaign.

We feel we’re getting a lot of traction, we’ve met with many potential institutional clients and in the relatively short window of time have received $210 million from the US so far and we’re very happy with the progress that we’re making and with what we’re seeing. Our in house professionals have been active, we’re spending a lot of time with consultants explaining our products and feel that the opportunity continues to remain vast.

Additionally, we’re beginning to make good progress in Germany and the Middle East. Obviously Greg Coffey’s departure and the uncertainty regarding the emerging markets fund will have the impact of leading people to pause. It’s logical, not totally unexpected but we’d hope that it will not last too long.

In terms of our 126 investment professionals, we pride ourselves having created a positive environment which people are working together to achieve their investment goals and our retention levels remain very high. Given Greg’s decision to leave GLG, we would not be surprised to ultimately lose most of the members of his emerging market team.

That said, as we speak, we’re making more hires and taking advantage of the current market conditions to add more quality professionals. One example of the quality people joining GLG recently is Daniel Geber and his team, they joined us within the last two months, replicating at GLG a Morningstar and Lipper award winning team and will focus on global small and mid cap companies.

In terms of inflows into the business, we’ve had positive inflows for the first quarter as well as in April, approximately $787 million for the first quarter and approximately $250 million of positive inflows in the month of April. We have not yet observed the general slowdown in the business or in people’s interest for investing that some other companies in our sector have referenced.

Clearly the noise and uncertainty surrounding Greg Coffey will have an impact. He managed as of the end of April a total of $6.3 billion. I would expect the bulk of it to remain with us until around his departure date and ultimately through the course of time for us to retain at the very lease $2 billion of that money and hopefully more.

Finally, to sum up, though we’re clearly facing some cross currents near term, we remain optimistic about the future, we’re focused on meeting the needs of our investing clients and are confident about our ability to generate performance. Operator, let’s open up the call for questions.

Question-and-Answer Session


(Operator instructions) Your first question comes from Roger Freeman – Lehman Brothers.

Roger Freeman – Lehman Brothers

On Coffey’s fund, so how much of that $6 billion or so in AUM is high net worth money and how much of that do you have, because you have a fair amount of discretion over high net worth funds, can you just walk through that. I guess the amount you were expecting is somewhat higher than I would have thought.

Noam Gottseman

I tried to give you what I think is a worst case scenario here. We have $1 billion of discretionary money, we have one of the funds within EM stable, we will be retaining in house, which is about $1 billion. And I’ve given you that number and the assumption that other clients don’t choose to move into other GLG funds or that we fail to have a succession and transition team. I would hope that we would be able to achieve that. And so I’ve tried to give you the worst case scenario that I can envisage.

Roger Freeman – Lehman Brothers

What are you seeing more broadly around emerging markets funds, I hear from some of your competitors obviously, emerging markets have been under pressure this year, I assume that there are funds blowing out across the board and other strategies, is that a fair assessment?

Noam Gottseman

I’m not so sure it is. I think there’s a broad distribution. What I would say is that the main emerging market fund or what we call the main emerging market fund is much more of a macro fund than an emerging market fund. It’s a macro fund that tends to display its views through emerging markets. And I think that the performance of macro funds has been really all over the map.

In terms of our pure emerging market products, we are doing well and also away from Greg’s group in several of our other funds that have emerging market components which are managed by other GLG teams, the performance has been terrific and so emerging markets as a general thing has not been that difficult and we remain extremely optimistic about that area. We remain incredibly committed and will no doubt have a product and a strong offering as soon as we’re able to pin down all the details that we need to.

Roger Freeman – Lehman Brothers

During the six month period, you can bring in another team and launch a new fund or extend this one? Can you talk to what your options are on that?

Noam Gottseman

Our options are all of the above. We can bring in a new team, Greg, if we choose to, Greg will assist us in the transition. We are meeting with many potential people for the emerging markets and for macro. And there are no shortages of talented individuals around.

Roger Freeman – Lehman Brothers

And were you to essentially startup a new fund and wind down the existing one, would that then negate the high water marks and you’d be starting over fresh with the new fund?

Noam Gottseman

Potentially, it’s not clear to me that we would wind down the existing fund.

Roger Freeman – Lehman Brothers

Also just I guess a broader strategy but I think it would apply to the emerging markets, is there a strategy to break down some of the larger funds into say smaller subcomponents because since you don’t net across funds it would give you more of an opportunity. As you talk about emerging markets, some pieces of it did well and you could capture that if they weren’t lumped into one large fund, is there a strategy, like the mining fund for example, I think was a spin out from a long short fund.

Noam Gottseman

It was a spin out but there was some specific client request for that and it seemed like a good stand alone strategy. Ultimately many of the funds have multi-strategy components within them and I think that we feel that we have a good and solid product offering and I don’t expect us to start cutting down the component funds into smaller bits to overcome high water marks.

I think our best solution there is to look after our clients and make their money back and that’s the more logical way to go. Having said that, if we do have good standalone products or opportunities we will clearly launch those.

Roger Freeman – Lehman Brothers

It’s encouraging you got some funds from US investors, $200 or so, how many investors did that encompass so far?

Noam Gottseman

I think it’s around half a dozen investors so far. But it’s hard to, as you know in discussions we’ve had in the past we’ve been very excited about the opportunity and we are more excited by the dialogue we’re having and by the response that at any stage to date.


Your next question comes from Prashant Bhatia – Citigoup.

Prashant Bhatia – Citigroup

How much AUM is managed by each of say the top three PMs in the firm? I’m just trying to gauge the risk of another Coffey type event.

Noam Gottseman

I don’t think there is the risk of another Coffey type event because Greg was sort of a unique situation, he is the sole portfolio manager on his funds, he has a team beneath him but he was really, he’s the only trigger puller within his group. All the other funds are very broadly diversified in terms of individual PMs and analysts. And clearly this was a risk to the business with hindsight [aflore]. But I think there’s lessons to be learned from this and we’re learning them.

Prashant Bhatia – Citigroup

So there’s no other PM that controls $3, $4, $5 billion that’s the sole trigger puller?

Noam Gottseman


Prashant Bhatia – Citigroup

Just in terms of the $767 of flows that you had, can you just give us a feel for maybe the gross inflows and the gross outflows and maybe a trend there on both of those?

Jeffrey Rojek

The gross inflows are about $3 billion. And the gross redemptions were about $2.3 billion, which nets out to your 0.77 of inflows.

Prashant Bhatia – Citigroup

And the trend on both of those? For example did redemptions pickup quite a bit or was it the inflows that accelerated?

Jeffrey Rojek

I don’t think there’s any particular trend that can be gleaned from that.

Noam Gottseman

And obviously a big chunk of that can be and would be switches from one fund to another and clients’ movements within.

Prashant Bhatia – Citigroup

And then any plans to accelerate the share repurchases based on what the stocks done?

Noam Gottseman

We have a large share buyback program, we’re going to be very opportunistic and we’ll use our bullets judiciously. But we have all our options open.

Prashant Bhatia – Citigroup

Finally on the US push, anymore plans to get on some of the distribution networks, maybe tap into the high net worth client base and I guess what are the consultants selling in terms of GLG products, what’s of most interest to the consultant?

Noam Gottseman

Of most interest to them are European based products, they’re sort of spoiled for choice. I think with domestic US fund managers, but are not with European products, we’re seeing a lot of interest in European long shorts, a lot of interest in our European quantitative strategies, our UK products, convertible, convertible [art] continues to be a big focus.

It’s been pretty broad, different groups have different interests. Pertaining to the private families and individual clients, I think the opportunity is just so enormous on the institutional side right now that that’s where we’re going to focus for the foreseeable future.


Your next question comes from Craig Siegenthaler – Credit Suisse.

Analyst for Craig Siegenthaler – Credit Suisse

This is actually Mike [Zeremsky] filling in for Craig Siegenthaler. Two quick questions, in the prepared remarks you said four new funds were opened and you were seeking to expand strategies. Are you guys looking to expand the product mix specifically target any of the assets classes which might contain some of the largest dislocations in the market right now? And second can you provide us with an update on the Middle East distribution platform in light of Coffey’s departure, what level of flows if any came from this region?

Noam Gottseman

Firstly in the new asset classes, we will shortly be in the position to announce a very impressive higher end of the distressed space. And we are continuing to work along full credit and distressed as a growth area which we do feel provides great opportunity. And so you should expect to see us move into that area. We’re looking pretty eclectically around opportunities and where we think there’s dislocations.

On the Coffey side, Middle East was a big investor into his products, but not exclusively in any way. I think it was pretty broadly based in some of the demand we’ve seen both from sovereigns and institutions across our product range.


Your next question comes from Robert Lee – Keefe, Bruyette & Woods.

Robert Lee – Keefe, Bruyette & Woods

To clarify on the high water mark issue, it’s there until you essentially earn it back, it’s not like there’s an annual and you have a year to make it up and then it kind of falls away?

Noam Gottseman

No, it’s there until we make back the money. By way of example, while the high water market, it’s been a difficult period, we have suffered several periods which have been close to as difficult, last summer being one of those periods where we had adverse performance. And I feel confident that we will be able to recoup this.

Robert Lee – Keefe, Bruyette & Woods

In thinking about the, moving aside from the flow issue for a second of the departure, I mean you’re obviously going to as you say in the press release or in the presentation reverse comp those accrued for Mr. Coffey, but I guess I should really be assuming that considering that you’re out there hiring new teams that for the most part that’s potentially going to fund whoever you’re going to be hiring or the new teams your bringing on board, should I think of it that way?

Noam Gottseman

I think you should think about it that we have a very large and considerable pool of shares and cash with which to attract and obviously retain our talent and we’re going to try to make the best investments. The public currency remains a large and positive tool to attract people and we really are being bombarded with people across and very talented individuals across large sectors and are spending a great deal of our time meeting with them and learning and seeing who might be suitable.

Robert Lee – Keefe, Bruyette & Woods

And possibly a little bit of color on the flows you had at least through April, you mentioned, talked a little bit about what came out of the US and the products you’re marketing there. But I guess I’ve been under the impression that the large emerging markets fund had maybe had sort of a soft close on it. Until he announced that he was leaving, were you seeing a pretty good chunk of flows into that or were the flows actually year to date pretty well diversified?

Noam Gottseman

Very well diversified year to date.


Your next question comes from [Garap Penticar] – Sunova Capital.

[Garap Penticar] – Sunova Capital

Can you give us some color on the Sal Oppenheim relationship, how is that going and what kind of inflows are you seeing there?

Noam Gottseman

It’s going well. We are being put on the platform and we have started the campaign and are positive and hope that if we achieve the internal expectations that Sal Oppenheim have set we’ll be very pleased with the results.

[Garap Penticar] – Sunova Capital

Any hard numbers on how much has come in already and what do you expect for the year?

Noam Gottseman

We’ll give you further updates later, we don’t want to go into that level of granularity.


Your final question comes from Mickey Schleien – Ladenburg.

Mickey Schleien – Ladenburg

Previously you had indicated to me that you may have interest in acquisitions, not particularly large ones but opportunistically look at acquisitions as a way to grow and given the stress in the markets overall and within the hedge fund world, is that something that is a higher priority for you at this point or have you taken it off the table?

Noam Gottseman

No it’s not off the table at all. Our highest priority is to recoup performance and do a great job for our investors. And we’ve obviously over the last month been dealing with the ramifications of Greg’s departure. But I think we’re on the front foot and fully focused on it and we are seeing many, many interesting candidates.

Obviously what you’re referencing has served to reduce the pricing power of people, but I think people in general we’re having some very, very interesting discussions. Now we’re agnostic in some respects whether we hire individual portfolio managers or we hire teams or if we actually look at companies. We’re going to look at this on a case by case basis and try and find the best people we can.


At this time there are no further questions in the queue.

Noam Gottseman

Thank you very much, if there’s no further questions I’ll hand it back to Stephanie to wrap up and thank you all very much.

Stephanie Linehan

Thank you for coming to the call, thank you.

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