'Dr Doom' Tony Dye to wind up hedge fund because of ill health

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The Independent Online

Tony Dye, the former chief investment officer of Phillips & Drew, who earned the nickname Dr Doom for his bearish stance on shares during the stock market boom of the Nineties, is to wind up the $70m (£35m) hedge fund he manages after falling ill.

Dye Asset Management broke the news in a letter to shareholders in its Contra Fund on Friday, advising them to withdraw their cash from the fund now ahead of its formal winding-up.

The letter said Mr Dye was "suffering from serious ill health that is likely to incapacitate him for several months".

Mr Dye set up Dye Asset Management seven years ago after spending a 15-year stint as chief investment officer at Phillips & Drew. Ed Knox, a former pension fund manager for Foreign & Colonial, who worked with Mr Dye at P&D, partnered him in the new venture. Manraj Ahluwalia, the former head of risk management at P&D, joined the pair in April 2003.

The company's Contra Fund, a long-short hedge fund focused on UK equities, launched in March of 2001 with assets of around $400m (£204m). However, it has performed poorly over the past year, and now contains only $70m.

Mr Dye earned his Dr Doom tag in the late 1990s, when he began predicting the market collapse, some four years before it arrived. He wiped about £8.5bn off the funds he managed by sticking with his value-based management style, quitting the firm in March 2000, just two weeks before the bear market began. Within weeks, his funds rocketed from the bottom to the top of the performance league tables.

The erosion in the Contra Fund's value in recent months follows a repositioning of its portfolio in line with Mr Dye's belief that markets are once again heading for a downturn. However, equities have continued to perform very strongly since the correction last summer.