AJO Partners plans to shut the value-investing firm after more than three decades according to Ted Aronson, the co-founder, and co-CEO. The closure will see the firm return $10 billion to investors, an act reminiscent of Warren Buffet’s closure of his Buffet Partners in 1969.
The U.S value investor and international equities investment manager established in 1984 is shutting its doors after enduring several years of no value. Aronson explained in the letter to investors that the current market conditions are causing the fund to suffer, having lost its competitive edge due to many forces influencing the market
“Our relative performance has suffered because our investment edge, our ‘secret sauce,’ is at odds with many forces driving the market,” Aronson wrote in a letter to AJO Partners clients this month according to Business Insider.
“However, the drought in value — the longest on record — is at the heart of our challenge,” he continued. “The length and the severity of the headwinds have led to lingering viability concerns among clients, consultants, and employees.”
- Read also; UACN’s Paint Manufacturing Subsidiaries, CAP Plc and Portland Paints Plc to Merge
- Airtel Africa Plc grew revenue by 10.7% as customer base rises by 12.0% YoY
In 1969, a similar move was made by Warren Buffett now a billionaire investor and the CEO of Berkshire Hathaway, when he closed his Buffett Partners paid back his investors to avoid a similar losing streak
In a letter to his investors in October 1967, Buffet’s worries included a sharp decline in the number of bargains available, volatile markets fueled by soaring demand for short-term gains, the challenge of managing more money with fewer good investment ideas, and his declining interest in chasing short-term profits according to Business Insider.
The investor also warned of “speculation on an increasing scale” that undermined the effectiveness of his approach. “I am out of step with present conditions,” he said.
In January 1969 letter buffet wrote “I can’t emphasize too strongly that the quality and quantity of ideas is presently at an all-time low,” he said.
“I just don’t see anything available that gives any reasonable hope of delivering a good year and I have no desire to grope around, hoping to ‘get lucky’ with other people’s money.”
“I am not attuned to this market environment and I don’t want to spoil a decent record by trying to play a game I don’t understand just so I can go out a hero,” he added.
By; Ifunanya Ikueze
