After Barring a Fund's Exit, a Veteran CEO Exits
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Monday, December 14, 2015

After Barring a Fund's Exit, a Veteran CEO Exits

Five days after Third Avenue [profile] barred the exits on one of its mutual funds, its 24-year chief is gone.

David Barse
Third Avenue Management LLC
Chief Executive Officer
This morning Third Avenue Management founder (and famed value investing guru) Marty Whitman confirms that today CEO David Barse, 53, is leaving the New York City-based, AMG-backed value manager. And no single CEO is slated to fill Barse's shoes. Going forward, Third Avenue will be led by its five-person management committee: president and chief investment officer David Resnick, chief financial officer and chief operating officer Vinnie Dugan, general counsel and secretary Jim Hall, PM Matt Fine, and PM Jason Wolf.

Rob Copeland, Serena Ng, Matt Wirz, and Gregory Zuckerman of the Wall Street Journal broke the news of Barse's departure last night. Barse didn't comment to the paper, though an unnamed security guard confirmed the chief's departure. Bloomberg and Reuters followed up on the WSJ's article.

Whitman describes the leadership shift as "a step that enables Third Avenue to return to its roots, with broad-based leadership."

"I thank David for his years of devotion to the firm and the contributions he has made to the organization," Whitman states.

AMG is feeling the impact, too. Its shares fell 7.9 percent on Friday (the S&P 500 fell 1.95 percent). And AMG chairman and CEO Sean Healey is chiming in about the Third Avenue management change, stating that he's "confident in the firm's future path, especially given the depth and quality of Third Avenue's management team and their commitment to creating long-term value for investors."

"We have the utmost confidence in the Management Committee and the entire firm, and look forward to continuing to work with Davie, Vinnie, Jim, Matt, and Jason as they advance the business, and to Third Avenue's future success," Healey states.

Third Avenue launched the Third Avenue Focused Credit Fund six years ago, in the wake of the depths of the financial crisis. The high-yield bond mutual fund passed $900 million in a year and then $3 billion in 2014. Yet this year, amid the high-yield debt market's woes, the fund has suffered more than most, falling 27 percent year-to-date as of last Wednesday even as (per Morningstar data) its peers have fallen 3.8 percent on average. The now-one-star fund's assets were down to $789 million as of last week. Per Morningstar, Third Avenue had $8.152 billion in non-money-market mutual fund AUM as of July 31. The fund is PMed by Tom Lapointe.

Last week Barse told investors that Third Avenue would liquidate the bleeding fund, but not right away. Instead, the fund's shareholders would be barred from redeeming their shares and a new trust will instead make periodic cash distributions during the liquidation so that the fund can avoid a fire sale. An unnamed source reportedly told the WSJ that Third Avenue didn't get the SEC's approval on this extraordinary plan.

An alumnus of George Washington University and Brooklyn Law School, Barse took over Third Avenue in 1991. He previously worked in bankruptcy and corporate law, at Zalkin Rodin & Goodman and then at Robinson Silverman Pearce Aronsohn & Berman.

It's hard to overstate the visibility of Third Avenue's woes over the last week. None other than Mad Money's Jim Cramer, co-founder of TheStreet, has offered his take on the fallout, and he cited a similar situation at a hedge fund, Stone Point Capital Partners. Former Pimco chief Mohamed El-Erian and bond kind-contender Jeff Gundlach have also publicly weighed in. Here's a roundup of the rest of the coverage:

12/14 - "Junk Bonds Stagger as Funds Flee," the WSJ;

12/14 - "Bond Rout Spreads Beyond Junk," the WSJ;

12/14 - "Third Avenue rattles the junk bond market," InvestmentNews;

12/14 - "Investors See Third Avenue Fueling More Bond Market Carnage," Bloomberg;

12/14 - "Third Avenue Says Barse Leaving After Fund Froze Redemptions," Bloomberg;

12/14 - "Third Avenue confirms CEO Barse is out; management committee to lead firm," MarketWatch;

12/14 - "Junk Bond Fund's Chief Departs After Blocking Withdrawals," the New York Times;

12/14 - "Third Avenue dumps CEO Barse amid turmoil," CNBC;

12/14 - "Icahn's high-yield bond fund 'meltdown' call overdone," the Financial Times;

12/13 - "The Liquidity Trap That's Spooking Bond Funds," the WSJ;

12/13 - "Third Avenue Ripples Hit Credit in Europe as Bond Risk Rise,", Bloomberg;

12/12 - "Third Avenue junk fund blowup exposes risks of unsellable assets," Reuters;

12/12 - "Junk-Bond Fund's Demise Highlights SEC Mutual-Fund Worries,", the WSJ;

12/11 - "Worried About Your High-Yield Bond Fund? Devise an Exit Strategy," the WSJ;

12/11 - "A Junk Bond Fund Freezes Out Investors, and the Chills Spread," the NYT;

12/11 - "Junk-Bond Fund's Demise Mars Vulture Investor's Storied Career,", the WSJ;

12/11 - "Junk bond managers battle fallout from Third Avenue fund blowup," Reuters;

12/11 - "Bond Worries and Stress Tests," Bloomberg;

12/11 - "Third Avenue fund close sends shivers through credit markets,", the FT;

12/11 - "Junk-Bond Rout Deepens, Sending Shockwaves Through Stocks and Other Markets,", the WSJ;

12/11 - "Third Avenue Redemption Freeze Sends Chill Through Credit Market,", Bloomberg;

12/11 - "Junk Bonds Are Tanking and Icahn Says Meltdown 'Just Beginning,'", Bloomberg;

12/10 - "Junk Fund's Demise Fuels Concerns Over Bond Rout,", the WSJ;

12/10 - "Third Avenue Locks Up Junk Fund Assets For 'Up To A Year,' Cites Thin Bond Liquidity," Barron's;

12/10 - "Third Avenue Management To Liquidate Focused Credit Fund," Barron's;

12/10 - "A Junk Bond Fund Will Liquidate, and Reimburse Investors Slowly,", the NY Times;

12/10 - "Third Avenue shuts doors on $800m high-yield bond fund,", the FT;

12/10 - "Third Avenue Freeze-Out,", Bloomberg;

12/10 - "The Hunt For Yield Brings Down Third Avenue's Focused Credit Fund," Forbes.

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