Grantham Mayo Van Otterloo & Co., the money manager known for the bearish views of founder Jeremy Grantham, has cut about 10 percent of its 650-person staff in a retrenching that follows a sharp decline in assets.
The departures include nine equity and fixed income analysts, Morningstar Inc. said in a report on the GMO Benchmark-Free Allocation fund. The firm this month disclosed several senior departures and said it would abandon fundamental stock-picking by the global equity team to fully focus on quantitative investments.
Value investors including GMO are struggling after a seven-year stock market rally left few bargains. Grantham, best known for detecting bubbles in equity markets, told shareholders last month that stocks are still expensive but not in bubble territory. Investment firms including Baupost Group have lamented the lack of bargains as the Federal Reserve monetary stimulus inflated asset prices.
GMO’s assets have fallen 20 percent over the past two years to $99 billion, according to the report by Morningstar’s Leo Acheson. Tucker Hewes, a spokesman for GMO, declined to comment.
The firm’s $15.9 billion Benchmark-Free Allocation Fund III is flat this year and beating just 17 percent of peers, according to data compiled by Bloomberg. Other funds, including GMO Emerging Markets III and GMO Quality Fund III, have seen assets shrink significantly since the end of 2012, data compiled by Bloomberg show.
David Cowan, head of global equity, and Chris Fortson, head of fundamental research in global equity, will depart at the end of the month, according to Morningstar. The global equity team has used fundamental stock picks as part of its portfolio since 2012 when it broadened its mandate to improve diversification, according to the report.
Earlier this month, GMO said Sam Wilderman, co-head of GMO’s asset allocation and developed fixed income teams, will leave at the end of the year. Ben Inker will be sole head of the group. The announcements follow news that Brad Hilsabeck, chief executive officer of GMO, will step down at the end of this month and be replaced by Peg McGetrick on an interim basis.
Grantham, 77, is famous for his accurate prediction in 2000 that U.S. stocks would lose ground for the next decade.