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Sprott profit plunges 96%

Tags: Sprott Inc.
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Sprott Inc. (SII-T) reported a 96-percent plunge in fourth-quarter profit as falling precious metal prices hurt investment results and performance fees.

"In 2011, the sovereign debt crisis led to unprecedented volatility and central bank intervention in the financial markets," Sprott's chief executive officer Peter Grosskopf said in a statement on Thursday.

"Our funds were positioned defensively throughout the year. However, weakening prices in precious metals and, particularly, their related equities, impacted our investment results and performance-fee generation."

Profit at the Toronto-based wealth management firm fell to $4.6 million, or 3 cents a share, for the year ended Dec. 31 from $108.6 million, or 72 cents a share, a year ago. Total revenue dropped to $38.1 million from $242.1 million.

Assets under management also slid to $9.1 billion at Dec. 31, 2011, from $9.9 billion at Sept. 30, 2011.

Despite what Grosskopt described as a "challenging environment," he said the firm is continuing to invest in building and diversifying its business.

"During the year [2011], we added new products, increased our presence in the U.S. market and made a number of key hires to further strengthen our investment and sales teams."

One of the hires was John Wilson, a former chief investment officer with Cumberland Private Wealth Management. He took over management of Sprott Opportunities Hedge LP and Sprott Opportunities RSP Fund last month.

Those funds had been run by two other Sprott managers after star hedge fund manger Jean-François Tardif left the firm in mid-2009 to "retire." After being out of the business for three years, Tardif is returning in May to run JFT Strategies Fund, a closed-end hedge fund, for First Asset Management Inc. It begins trading in May.

It is not clear whether Tardif, who has founded his own firm, Timelo Investment Management Inc., will attract assets away from his old Sprott funds. He ran about $420 million in assets at Sprott, and his former funds, which generated strong returns over five years, suffered net redemptions for a while after his departure.

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