BlueMountain Shareholder AMG Weighs Hedge Fund Firm Exit

(Bloomberg) -- Affiliated Managers Group Inc. is exploring a sale of its majority stake in BlueMountain Capital Management, according to people familiar with the matter, after the firm took a first-quarter writedown as the hedge fund's value fell.

AMG has been working with advisers on a potential sale, said the people, who asked not to be identified as the discussions are private. AMG and BlueMountain are looking for a buyer that would invest new capital to help grow the business, they said.

BlueMountain has attracted interest from potential buyers including insurers looking to add to their hedge fund capabilities, two of the people said. Some suitors have shown particular interest in the division that handles collateralized loan obligations, they said.

No final decisions have been made and BlueMountain may decide to keep all or part of its stake, the people said. A representative for AMG didn't immediately respond to requests for comment. A spokesman for closely held BlueMountain referred questions to AMG.

AMG shares fell 1.2% to $80.13 in New York at 11:57 a.m. The stock has declined about 18% this year.

BlueMountain's performance in the first quarter was “really challenging,” AMG Chief Executive Officer Nathaniel Dalton said on a call with analysts at the company's financial results in May, where it also reported a $415 million writedown on the value of its stake. AMG said in a filing at the time that the fair value of its investment in BlueMountain “had declined below its carrying value” and that the decline was “other-than-temporary.”

The same month, BlueMountain also said it was liquidating its computer-driven portfolio, which people familiar with the matter said had a book size of about $1 billion.

BlueMountain's growth expectations had “declined significantly,” and its flagship product had underperformed, said AMG, which owns stakes in boutique investment managers that together oversee more than $770 billion in assets. The firm manages about $19 billion and was co-founded by Andrew Feldstein and Stephen Siderow, according to its website.

It's been losing talent, too. Omar Vaishnavi, head of fundamental credit and special situations, is leaving the firm, a representative for BlueMountain said last week. European operations chief Louisa Church left earlier this year to join Och-Ziff Capital Management Group LLC.

In the past 12 months, BlueMountain has added 10 positions to teams including fixed income, health care, infrastructure and CLOs.

--With assistance from Mark Bergen, Thomas Beardsworth, Nishant Kumar and Sridhar Natarajan.

To contact the reporters on this story: Nabila Ahmed in New York at nahmed54@bloomberg.net;Hema Parmar in New York at hparmar6@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, Amy Thomson, Matthew Monks

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