EcoAlpha Asset Management began operations last October touting a highly experienced team and the prospect of cashing in on a ‘multi-decade global spending cycle’ as governments and private companies come to grips with new environmental challenges (investors get to feel good about themselves too!). But the firm’s CEO Matthew Fitzmaurice and chairman Win Neuger have a more complicated history than their official bios would lead you to believe.
“Neuger and Fitzmaurice want institutional capital–and plenty of it,” writes Roddy Boyd of the Southern Investigative Reporting Foundation. “What they don’t want, in all probability, are probing questions.”
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Red flags in EcoAlpha leaders’ past
Boyd explains that Neuger played an important and poorly understood role in the financial crisis as a major player at AIG. He was responsible for $700 billion in assets at the AIG Global Investment Corp and used AIG Global Securities Lending to make big investments in risky mortgage backed securities and allowed what was supposed to be closely matched assets and liabilities (in both amount and duration) get out of whack with $900 million too much on the liabilities side. This mismatch combined with the crumbling MBS market played a big role in AIG’s near collapse.
Fitzmaurice doesn’t have the same kind of high-profile role in a crisis that Neuger does, but Boyd points out that he was still touting tech stocks as late as 2002 as CEO of Amerindo Investment Advisors, a tech-only fund that had phenomenal growth in the late 90s and then watched its assets under management fall from $8 billion in 1999 to $1.4 billion in 2002. Its founders, Gary Tanaka and Alberto Vilar, were eventually convicted of fraud for misappropriating client funds, among other lapses, in cases that didn’t involve Fitzmaurice in any way, but still cast his former firm in a poor light.
EcoAlpha looking for the next bubble?
What’s worrying is that EcoAlpha is pitching itself as a way for investors to get involved in the next big thing – ‘public market equity companies providing solutions to the global problems of burdened resources’. But the people at the head of the organization were deep in the last two market bubbles, advocating high risk stocks and assets until the very end. Obviously they weren’t the only people who got caught up in market hype, but that doesn’t exactly recommend them as the best people to look for the next big thing.