Dock Street Takes Over Three Portfolios of Asset-Backed Securities

July 15, 2009  (Kristen Haunss, Bloomberg): Dock Street Capital Management, founded in February by former employees of KBC Group NV’s investment-management arm, took over three portfolios of asset-backed securities worth a total of about $3.1 billion.

New York-based Dock Street in June was appointed replacement collateral manager of collateralized debt obligations that KBC Structured Investment Management had taken over last year from Robeco Investment Management Inc., Harding Advisory LLC, and Hartford Investment Management Co., according to Bloomberg data and Moody’s Investors Service reports. The Dock Street partners managed the CDOs while they were at KBC. Dock Street’s managing partners include David Crowle, Patrick Kelly and Jeffrey Holtman, who worked together at KBC  Financial Products. They founded Dock Street to focus on distressed CDO management and advisory services amid the global credit crunch, Crowle said. The firm has hired two employees and is looking to add more as needed, he said.

“We believe there are opportunities for a small independent firm offering liquidation, advisory and portfolio management services,” Crowle said in a telephone interview yesterday. The Hartford, Robeco and Harding portfolios were initially reassigned to KBC in 2008 after they breached different tests they were required to meet, Crowle said. The controlling class of noteholders is often allowed to remove a manager if those tests are violated, he said.

The controlling class of noteholders nominated and directed the portfolios’ trustees to reassign them to Dock Street, Crowle said. A CDO is a portfolio of bonds sliced into varying degrees of risk and return.  Dock Street will seek growth by taking over portfolios of other firms or through acquisitions, Crowle said. He declined to comment on specific discussions. The firm’s liquidation business has already handled a  number of portfolios, Crowle said. “We’re an active liquidation agent,” he said. “We are liquidating portfolios for trustees and major institutions on a public and private basis.”

“Dock Street will continue to take over management responsibilities of structured portfolios where it is paid a fee for overseeing the assets”, Crowle said. Brussels-based KBC Group is Belgium’s third-biggest  financial-services company.

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