November 3, 2015 / 4:46 PM / 2 years ago

BlueMountain won't replace Staley; leaving to be Barclays CEO

NEW YORK, Nov 3 (Reuters) - BlueMountain Capital Management will not replace Jes Staley, a managing partner who is leaving to become chief executive officer of Barclays in December, the New York-based money management firm wrote in a letter to investors obtained by Reuters on Tuesday.

Staley joined the $22 billion private investment firm in 2013 from J.P. Morgan Chase.

"While we will miss Jes and the important contributions he made in the firm, his departure will not meaningfully impact our day-to-day business," BlueMountain said in the letter that summarized third quarter results. "We have no near-term plans to replace Jes, whose role was specifically created to leverage his unique talents and experience."

Like many hedge funds, BlueMountain appears to have been stung by the sharp slide in shares of Valeant Pharmaceuticals .

The letter said its funds lost money over the third quarter from a bet on the stock of an unnamed "specialty pharmaceutical company" that faced a potential subpoena from U.S. House Democrats and whose stock "declined on concerns over potential governmental actions, including the prospect of price control policies."

BlueMountain held more than $112 million worth of Valeant shares on June 30, according to public filings. Valeant has been under significant scrutiny in recent weeks following allegations about its accounting practices and concerns over price increases for its drugs. On Oct. 15, Valeant said it had been subpoenaed by U.S. prosecutors seeking details on its patient assistance programs, drug pricing and distribution practices.

"This has continued to be a fluid and volatile situation with significant developments in October leading to heightened concerns and uncertainty over the company's pricing and distribution practices," BlueMountain said. "We exited our long position in this stock in October, but remain very close to this dynamic situation and would not rule out future exposure."

A spokesman for BlueMountain declined to comment.

BlueMountain's Credit Alternatives hedge fund lost 0.85 percent in October through the 23rd but is up 2.38 percent for 2015, according to a report by HSBC Alternative Investment Group obtained by Reuters. A benchmark of similar funds, the Absolute Return Credit Index, is up 0.92 percent for the year through September. A figure including October was not yet available.

A smaller stock-focused vehicle, the BlueMountain Long Short Equity Fund, declined 2.44 percent last month through October 23, per HSBC. It's up 2.43 percent for the year versus a decline of 2.59 percent through September for the Absolute Return U.S. Equity Index. (Reporting by Lawrence Delevingne; Editing by Jennifer Ablan and David Gregorio)

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