AFR
VGI Partners suffers staff exodus as merger dawns
4-5 minutes
GCQ has opened up to client money and has already lured a handful of VGI staff.
David Symons, who was an investment director for VGI, has joined GCQ as its chief executive, while Justin Hardwick, who was previously a senior analyst for VGI, has taken on the role of head of research, AFR Weekend reported in December.
Other senior departures include Robert Poiner, who had worked for VGI since 2009 and led its New York office. He left late last year after resigning in July.
Henry Hill, who was an analyst at VGI, left in 2020 and has since joined WaveStone Capital, another Sydney-based hedge fund.
The staff exits come as VGI grapples with a rough patch of investment returns that culminated in its worst calendar year of performance last year.
The firm’s marquee hedge fund shed 3.3 per cent net of fees in 2021, the first time it has recorded a negative annual return, while global shares soared 28.8 per cent on a total return basis.
The departures do not include the exit of VGI chief executive Jon Howie, the former BlackRock executive who resigned this week after less than a year in the job.
The staff attrition underscores the challenges ahead for VGI as it embarks on a merger with Regal Funds Management, a slightly larger hedge fund firm run by local investment icon Phil King.
The proposed deal was announced on Monday and provides Regal shareholders with a 60 per cent stake in the combined business, delivering Mr King roughly 45 per cent of the new entity, while Mr Luciano would own roughly a quarter.
The pair indicated the deal would allow Mr Luciano to refocus his attention on investing, in part by relying on Regal’s marketing and management support.
“You learn more as an investor during challenging market environments and when performance is difficult,” Mr King said.
“When returns haven’t been strong, there is an opportunity to learn from that and become a better stock picker.”
Two senior Sydney-based figures in the hedge fund industry who compete with Regal and VGI said they were confounded by the proposed merger given the stark difference in investment approaches of Mr King and Mr Luciano.
“The thing the industry can’t get over is how he and Phil King can be in a room together,” one said.
“No one seems to think the deal makes sense. There is not really a cross-sell. Everyone is scratching their heads.”
“They have absolutely nothing to do with each other,” said another grandee of the local hedge fund scene, who questioned the logic behind the deal.
Mr King said the deal offered a chance for VGI to leverage support from Regal and for Mr Luciano to refocus his attention on portfolio management.
“Rob and I have similar philosophies and I have a deep respect for his fundamental investment capabilities,” he said.
The wave of departures has also cast light on Mr Luciano’s management style, which can be combatant and direct. Mr Luciano has acknowledged his shortcomings in dealing with people.
“He’s tough, but he’s not the devil,” said one departing staff member, adding that Mr Luciano’s temperament had “nothing to do with me leaving”.
Another offered a harsher assessment: “The team has abandoned him [because he can be difficult to work alongside].”
A spokesperson for VGI Partners said its investment team “remains entirely focused on delivering strong returns for its investors”, and declined to respond to “commentary from sources”.
The departures of Mr Poiner and Mr Tynan in particular have left the company lacking senior staff with strong people-management skills, said one employee who left the firm during the pandemic.
The two “were very good at managing people. I think a lot of that is lost,” the person said.
(20min delay)