Morgens, Waterfall, Vintiadis & Co. is winding down its approximately $600 million distressed debt fund following the departure of the portfolio's lead managers. According to LMW sister publication, Foundation & Endowment Money Management,Stephen Ledoux and Neil Augustine have left Morgens, Waterfall to join investment bank Rothschild Inc., where they will advise creditors and debtors during bankruptcy processes.
Susan Waterfall, marketing director at MWV, said the firm is returning investments to its clients, which included foundations and endowments, pension plans, and high-net-worth individuals. She said some of the firm's clients have opted to reinvest their money into the firm's long-short equity fund, adding that some $50-100 million already has been switched over.
Augustine said the portfolio comprised mostly distressed loans. He noted that over the past few years it has become increasingly difficult to generate decent returns in the loan market. And the market is becoming more crowded. " There are a lot of nontraditional players jumping into the market," he said. "That will have an effect...bid up prices above where they should be." But with default rates at peak levels, there is ample opportunity for experienced managers to score, he said.
Both Augustine and Ledoux said leaving MWV was a difficult decision, largely because of the firm's personnel. "We think very highly of the firm and have a tremendous amount of respect for it," Ledoux said. Both Ledoux and Augustine worked previously in similar advisory positions at the Blackstone Group in New York, Ledoux said, adding that the two are excited about the switch back to investment banking. "We think the opportunities in the advisory business are attractive," he said.