Three members of an eight-person team overseeing the $1.8 billion high-yield portfolio of Seneca Capital Management, a San Francisco-based money manager with $14.9 billion in total assets, have resigned. High-yield officials close to the three say they were upset because they felt Gail Seneca, the firm's ceo and cio, was meddling in their investment decisions, causing their performance numbers to slide. Seneca's high-yield team has beaten its benchmark, the Lehman Brothers high-yield index, in every year since 1997, according to gross performance figures posted on the firm's Web site. However, the team underperformed its benchmark in the fourth quarter of last year. First quarter performance figures were not available, and Gail Seneca declined to provide them. Seneca would not comment on why the trio chose to leave, and says she has "no way of calibrating" how much she is involved with the high-yield group.
The high-yield officials who have resigned includeEvan Dreyfuss, an Atlanta-based co-portfolio manager who was promoted some six months ago. Analysts Janice Diamond and Henry Choi have also resigned. Senior sell-side officials say that while Seneca is not a top account, it has a substantial high-yield presence, and they dealt with Dreyfuss and Diamond in particular on a regular basis. An official close to the high-yield group says Diamond was the head of high-yield research, though Seneca says there was no research head, and that Diamond was merely a senior analyst. Diamond, who had not yet left the firm as of last Wednesday, referred calls to Seneca. The analyst has worked at the firm since 1995, and will now pursue "philanthropic interests," according to Seneca.
Dreyfuss, who worked at Seneca for over two years, will start his own hedge fund, LongLake Asset Management, in Skaneateles, N.Y. While he was unhappy with Seneca's management of the high-yield group, he was also tired of the travel between Georgia and his home in New York, a high-yield official close to him says. He declined comment. Choi, who was at the firm for less than three years, will work at a hedge fund in London or New York, says a source close to him. He did not return calls.
Seneca says the firm will make new hires, but not necessarily to perform the exact duties of the officials who resigned.