CAPE TOWN - Kaizen Asset Management is one hedge fund that has fallen victim to the demise of Steinhoff since their share price dropped in December 2017, Business Day reported.
Kaizen has since closed its doors as the company ended the month 32.8% lower.
"The Steinhoff scandal had a material, negative impact on the portfolio’s performance in December, given that it was one of our high-conviction positions," the company said in a note to investors.
The Kaizen fund ended 29.6% lower in 2017 versus the top 40’s 19.5% climb, was not the only Steinhoff casualty. Abax’s constellation hedge fund, a long/short equity fund, lost 18.7% in December and 11.9% in 2017.
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Ashburton’s dynamic equity hedge fund, meanwhile, lost 11.63% in December, ending the year 39.04% lower. Kaizen appears to be the only asset manager that has shut down entirely.
Caroline da Silva, Deputy executive officer for financial advisory and intermediary services at The Financial Services Board confirmed to Business Day that Kaizen had applied to lapse its license.
The Financial Services Board had asked all asset managers to report on losses as a result of Steinhoff and would question further where losses had been significant, Da Silva told Busines Day.
Kaizen’s strategic opportunities hedge fund had just R44m in assets at end-December. It was a qualified-investor hedge fund, meaning it could be sold only to sophisticated investors with a minimum of R1m to invest.
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Kaizen’s strategic-opportunities hedge fund considerably outperformed the top 40 index from 2011 to 2014, posting a 16.6% loss in 2015 (top 40: +4.5%) and a 4.7% gain in 2016 (top 40: -4.2%).