Contrarian Numbers for Contrarian Capital

Investors in hedge fund Contrarian Capital Management have pulled $1 billion in commitments from the struggling firm, the New York Post reported yesterday. According to the story, that’s about 14 percent of the distressed-focused firm’s total assets under management. NYP cited the fund’s negative 1.24% return in 2007 as the reason.

But according to a spokesperson at Contrarian Capital, the firm’s flagship fund’s net assets increased by 9.7% in 2007. Further, he said the firm’s assets increased by 11.2% From January to May 31 in 2008, and that its IRR was 15% from January 2001 through May 2008.

The reported $1 billion drop in assets is in addition to the $225 million Contrarian lost when it closed a loan portfolio managed by Stephen Czech. The incident also sparked a legal fight and a ton of negative publicity.

Czech was head of Contrarian’s loan arm, and took a five-week medical leave after his son was diagnosed with a brain tumor. He was dismissed upon his return, which sparked a legal scuffle with Contrarian chief Jonathan Bauer over unpaid compensation.

Now Czech is starting his own firm, called SJC Capital, and will soon be seeking $1 billion for a credit fund. He might not have far to look for LPs with money ready to allocate. (Czech’s son’s medical treatments were successful in reducing the size of the tumor, by the way.)

Adding to the bad news, J.P. Moreno, Contrarian’s vice president of emerging markets, has also left, the spokesman confirmed.

Read more about Czech’s new firm in Buyouts.