Philip Richards: The hedge fund star who crashed to earth RAB Capital’s Philip Richards has lost his once-golden touch.
Fund manager Philip Richards first heard the alarm bells last December. The star of RAB Capital had taken a £50m speculative bet on Northern Rock a couple of months earlier and now that the ailing bank was teetering on the brink of collapse that decision was looking foolish
RAB’s Special Situations fund led a flood of small mining and oil companies to London’s Alternative Investment Market (AIM) and became the single biggest investor in the junior market, with sizeable stakes in more than 70 companies. Richards made billions for his investors, while several Christian charities benefited from the huge bonuses he was receiving.
Today the $900m RAB Special Situations fund faces the threat of being liquidated unless investors agree to lock in their money for three years.
“If RAB Special Situations starts selling off its entire portfolio the ripples will be felt across AIM, as well as on Toronto stock exchange and in Australia,” said one stockbroker. “A lot of people will get hurt.”
During the resources boom, if you wanted to list a resources company there were about four people to talk to, and RAB was top of the list,” said Brock Salier, mining analyst at Ambrian Capital. “Liquidity is a real issue in all these stocks now.”
Amid the global-market turmoil, investors have been selling off the riskier bits of their portfolios. RAB Special Situations, with its investments in mining and oil exploration, is one of a number of darlings that have fallen out of fashion.
Having RAB on your share register was once a badge of honour for a small-cap firm. Today it is seen as a liability.
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MET Price at posting:
14.5¢ Sentiment: None Disclosure: Held
