In 2004, Basis Capital was named Macquarie Bank Ltd.'s "Skilled Manager of the Year." In 2005, "Fund of the Year." In 2006, Basis fell off the legitimate awards circuit radar, but we've heard reports that while vacationing in a small village just outside of Melbourne, manager Steven Howell entered a Vanilla Ice lookalike contest and won. So that's something. In 2007--yesterday, in fact--the Australian hedge fund took home the George Washington "I Cannot Tell A Lie" "Award" for being totally upfront and truthful about the piss-poor job of managing their clients' money they've done this year.
BC said Wednesday that its Aust-Rim Fund--the one not currently seeking bankruptcy protection--is down 50% this year, following what numbers men characterize as a "pretty much abysmal" summer. (In August, the firm closed its flagship Yield Fund, which is thought to have lost as much as 80% of its value, though managers Steven Howell and Stuart Flower claimed they were unable to "accurately estimate" the value of units left in the fund.)
Though Aust-Rim lost 13% in June and 33% in July and has seen many a redemption request of late--none of which will be honored, of course--the founders say they remain open for business. In fact, they've even added two structured credit clients since things started to go south. And why shouldn't they? According to Howell and Fowler, if you think about it, they're really not responsible for the declines. "We were careful in our analysis of the market," Fowler said. "We were careful in how our fund managers had chosen exposure from the market and how we in turn had an exposure through that process."
Not only were they careful, but Basis had and has been "working around the clock in three financial time zones," which really is something to be proud of, in spite of the fact that they've apparently been doing a shitty job in all three of them.
In their acceptance speech, the unfailingly modest Fowler and Howell pointed the finger at such shadowy figures as "a technical that has just sideswiped not only the structured credit markets but even the... equity markets, the foreign exchange markets, the commercial paper markets." And they warned investors in other funds that claim minimal exposure to the subprime party that those funds just aren't being honest.
They did not explain why a fund with "little-to-no" subprime exposure has the return profile of a fund that has, say, "a lot to a shitload" of such exposure, presumably because the music started playing and they got cut off.
Second Basis Hedge Fund On The Brink [FINalternatives]