Clive Hedge Fund Pays Partner $34 Million After Losing YearMatthew Brown and Jesse Westbrook
Clive Capital LLP paid its top-earning partner $33.5 million in the 12 months through February as the commodity hedge-fund firm managed by Chris Levett posted losses for clients for a second straight year.
The company’s three partners Levett, 43, Richard Boland and Elizabeth Holstein, received a total $39.2 million, Clive said in a filing to the U.K.’s Companies House. The fund, which awarded its highest-paid member $60.8 million in the previous year, didn’t identify details of the compensations.
Commodity funds have struggled to make consistent returns as economic and political concerns roiled markets. Clive declined 8.8 percent last year and 10 percent in 2011, according to two people with knowledge of the matter who asked not to be named because the information is private.
That compares with an average loss for hedge funds tracked by the Newedge Commodity Trading Index of 1.9 percent in 2012 and 3.8 percent in 2011. The index, which follows 56 funds, lost 0.5 percent in the four months through April.
Clive’s hedge fund posted investment gains of 1.8 percent in the year’s first four months, one of the people said. The firm’s assets under management have fallen by $600 million this year to $1.35 billion at the end of March, the person said.
Clive, which managed $3.6 billion at the end of 2011, awarded its highest-paid member $135 million in the 12 months through February 2011, according to company filings.
Hedge funds typically charge clients fees for managing money and on any investment gains, allowing managers to profit even in years when they post losses. Most hedge fund managers also invest in their own funds and make gains or suffer losses along with clients.
Clive in February announced the firm would cut the charges on its Class B shares to a 2 percent management fee and a 20 percent performance fee, down from 2.5 percent and 25 percent respectively, as a result of “two challenging years.”
“The fact that a manager can lose money and get paid so handsomely illustrates the ‘heads I win, tails you lose’ structure of hedge-fund fees,” Simon Lack, founder of SL Advisors and author of ‘The Hedge Fund Mirage: The Illusion of Big Money’, said in a telephone interview from Westfield, New Jersey, today. “It doesn’t cost 2 percent of $3 billion to run an asset-management firm.”
Levett started Clive in 2008 after four years at Louis Bacon’s Moore Capital Management LP. He stopped taking money from investors in 2009 after assets climbed to almost $4 billion. He didn’t respond today to a phone call and an e-mail seeking comment on remuneration and performance at the fund. Holstein, who oversees investor relations at Clive, declined to comment.
The fund paid its 11 staff $3.5 million and gave $553,000 to charity last year.
The fund’s Class A shares surged 44 percent in 2008, 17 percent in 2009 and 20 percent in 2010, according to investors. Class B shares, which started later, rose 16 percent in 2008, 16 percent in 2009 and 18 percent in 2010.
Prior to joining New York-based Moore, Levett worked at trading firm Commodity Corp. He started out in commodities in 1992 at American International Group Inc., where he traded oil.
Levett’s wealth is 250 million pounds ($382 million), unchanged from a year earlier, the Sunday Times reported last month. The U.K.’s wealthiest fund manager is Alan Howard, co-founder of Brevan Howard Asset Management LLP, whose personal fortune climbed to 1.5 billion pounds, according to the Sunday Times “Rich List.”