The Boston Globe reports:
Richard Grubman, the Boston hedge fund manager best-known for a testy confrontation with Enron’s chief executive before the energy company’s collapse, is retiring from the firm he helped to create 12 years ago.
Grubman’s departure from Highfields Capital Management was disclosed today at an internal meeting and in correspondence to investors. Co-founder Jon Jacobson will remain at the firm.
The 48-year-old Grubman told colleagues he had been working in the investment business for 26 years and looked forward to spending time on personal pursuits. His wife, Caroline, was diagnosed with breast cancer last year.
“Personal pursuits” and “spending more time with family” were the two reasons that Jeff Skilling gave for leaving Enron. He said at trial, “my head just wasn’t in it anymore.” And now Grubman is claiming pretty much the same thing. I sniff a trace of irony.
He and Jacobson were known within the financial world as aggressive investors who challenged executives at public companies. Grubman in particular is known for his exchange in 2001 with Jeffrey Skilling, then Enron’s CEO, during a conference call between the company and its investors. Enron had failed to produce a balance sheet with its other financial data, prompting Gruman to persistently question why the company was unable to prodive basic information. Eventually, an exasperated Skilling called Gruman an obscene name on the call and moved on.
How proud Grubman must be. Jeff Skilling calls you an asshole on a conference call and it’s the highlight of your career.
Enron filed for bankruptcy eight months later, leading to one of the most spectacular collapses in recent Wall Street history. Skilling is serving a long prison sentence for related fraud and insider trading charges, though the US Supreme Court vacated part of his conviction in June. Highfields had been short Enron stock, betting it would decline in value, at the time of the conference call.
Grubman and Jacobson, who was a high-profile investment manager for Harvard University’s endownment, created Highfields in 1998, with Harvard among its clients. Since the inception, Highfields has earned an average annual return of 12 percent while the Standard & Poor’s 500 index averaged 2 percent annually. It had $9.8 billion at the end of the second quarter.
In April Grubman was arrested and charged with assault and battery after he allegedly threw his car keys at a valet at the Ritz-Carlton in Boston. The case is pending.
