Chairman and chief investment officer of International Value Advisers (IVA), Charles De Vaulx, has taken his own life after the liquidation of his firm IVA in April of this year, jumping to his death from the company’s offices at at 717 Fifth Avenue in midtown Manhattan. The death of Vaulx, age 59, has come as a shock to his family, friends and colleagues, and stands as a dire warning against the very real dangers of stress on our wellbeing.
The suicide of de Vaulx is clearly inextricably linked to the liquidation of IVA which began taking place earlier this year. On March 10th 2021, IVA submitted a shocking document to the SEC, without any accompanying press release or letter to shareholders. The document announced that the investment firm planned to liquidate its two mutual funds before the firm itself would shut down.
A liquidation of this nature is more than simply unusual, it is almost unheard of. Whilst asset-management firms have been known to liquidate their funds, they are more likely to merge the offering into a larger and more successful fund. Full liquidations such as that of IVA are extremely rare and usually only occur in funds with very small asset bases. International Value Advisers were, however, certainly not small and despite heavy withdrawals over recent years the firm still held $1.9 billion in assets in their mutual fund alone at the end of February 2021. However, considering IVA at one time managed $20 billion in assets at the firms height, it is unsurprising that there was so much fear and speculation around the viability of IVA.
Typically, a firm of this size would not liquidate even if they were struggling for whatever various reasons, and would instead choose to put themselves up for sale. It is likely that de Vaulx will have certainly sought professional advice on this matter, potentially having liaised with a reputable insolvency firm such as Connect Insolvency in order to discuss what his best move was, as director. However, the choice to liquidate fully does seem still to be a surprising one.
So, why might IVA have taken course to liquidate exactly when it did? Which was, it must be said, a decidedly premature move it would seem, from the outside at least.
Prior to his death, de Vaulx had refused to comment several times on the firms choice to liquidate at such a time and so abruptly. A former IVA employee, however, suggested that his boss had always held in esteem the choice of renowned value investor Warren Buffett to return assets to shareholders relatively early in his career when circumstances began to appear to warrant such a course. The former employee speculated that de Vaulx may have been acting in line with this precedent, when choosing to liquidate IVA.
However, investors were indeed surprised when de Vaulx chose to liquidate the downsized fund in March, as it did remain relatively huge by most standards, generating positive, albeit modest, returns.
An in-depth consideration of the motivational forces behind the decision to liquidate IVA suggests that de Vaulx may have felt it to be simply too difficult to go on due to the endless stream of outflows, unfavourable market climate and the diminishing base of assets. Additionally, after the internal departures of De Lardemelle and Michael Malafronte, two key senior players, de Vaulx was left alone at the top. It can be speculated that due to this, the firm resembled something of a hedge fund dedicated to the vision of de Vaulx only. Unfortunately, hedge funds, unlike mutual funds, do typically opt for liquidation rather than say, selling or merging in order to try and stick out rough patches.
All things considered, the decision to liquidate may not, in fact, be that surprising, with de Gaulx’s mentor and friend Eveillard commenting “He didn’t even try selling because to him it was abandoning.”.
Sadly, de Vaulx is not the first to take his life in response to extreme stress, with men aged between 45-49 the most likely to end their lives in the UK according to the annual study from Samaritans. If nothing else, the death of Charles de Vaulx should stand as a sombre reminder of the still prevalent mental health crisis among men in the Western Hemisphere, which is largely due to the hugely detrimental high stress work culture many of us find ourselves trapped within.