Harry Resis, head of high-yield at Zurich Scudder Investments in Chicago and a longtime and high-profile portfolio manager, is giving serious consideration to leaving the firm, according to three senior sell-side officials who say they have spoken to him directly about the matter. They say he is unhappy over the planned reorganization of the high-yield business following Deutsche Asset Management's acquisition of Scudder, which is expected to be finalized within the next few months. While details are still being worked out, the plan would be to move the bulk of Scudder's roughly $5 billion in high-yield assets to Philadelphia, where it would be managed by Andrew Cestone, who currently manages some $650 million for Deutsche Asset Management. Resis, reached at Scudder's offices in Chicago, declined comment.
The sell-side officials say Resis was offered a position with Deutsche Asset Management in London, but is not interested. They say he does not want to move to London because it would be difficult to care for his handicapped brother. He is also said to be miffed that Dan Doyle, the number two portfolio manager in his group, was either not offered a spot at the reorganized firm, or not offered one he considers acceptable. Doyle does not intend to stay at the firm, according to sell-siders who have spoken with him. He declined comment. The bulk of the remaining members of the high-yield team, estimated to include about 15 analysts, traders, and portfolio managers, is said to be not interested in moving to Philadelphia. Mitch Wilner, an experienced high-yield trader at Scudder, is still undecided, says a sell-side source.
As of March 14, the eight funds managed by Scudder's Resis and Doyle had an annualized average total return of -1.59% over the last three years, and a -2.18% cumulative total return over the last year, according to Lipper. The three funds managed by Deutsche's Cestone returned 4.20% over three years, and -1.13% over the last year. The Merrill Lynch High-Yield Master II index, a widely used benchmark, returned .613% over the last three years and .344% over the last year.
Joan Gallagher, a spokeswoman for Zurich Scudder, referred calls to Missy DeAngelis, a spokeswoman for Deutsche Asset Management. DeAngelis would not comment on personnel.
Several high-yield officials argue that while Cestone has performed solidly, he lacks the experience of Resis. "I think most managers would confirm that there's a difference in the order of magnitude of difficulty in producing excellent returns on a bulk of assets that is $5 billion versus a pool of assets that is a tenth of that size," says Greg Dube, head of global high-yield at Alliance Capital Management.