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For better or worse?

For better or worse?

21.5.2013 17:28

IKOS is a European investment management company and one of the world's most successful Quant Hedge Funds. Founded in 1992, long before hedge funds became fashionable and widespread in Europe, Ikos had at its peak a few years ago EUR3.5bn of assets under management.

The most interesting thing about Ikos these days, however, is not its trading strategy, markets in which operates or returns it generates for investors. It is the acrimonious divorce of its founders, husband and wife duo of Martin Coward and Elena Ambrosiadou. The divorce which has been raging for 5 years, cost millions in any currency on legal fees, and keeps making news on front page of the Financial Times.

Martin Coward and Elena Ambrosiadou were one of Britain's most wealthy and glamorous couples throughout the 90s and into the last decade. Greek-born Elena Ambrosiadou studied chemical engineering at Cambridge, did an MBA at Cranfield University and went on to become a highly successful international executive for British Petroleum at the tender age of 27. She met Martin Coward when he was studying for his PhD. in mathematics at Oxford and they married soon after. Dr. Coward is a brilliant mathematician and went on to build a stellar career as the international strategist for Goldman Sachs in London and New York. While working at Goldman, he started writing software which was to make their fortunes, the Ikos computer trading program.

Elena and Martin founded Ikos in 1992 with Elena becoming its CEO and Martin the Chief Investment Officer. The husband-and-wife team then spent three years fine-tuning their trading models before launching their first product in 1995. Their model was based on a "quantitative" strategy that dismissed the decisions of traders and instead utilized computer modeling programs to execute trades. Ambrosiadou and Coward chose to concentrate their trading activities on Japan because they realized that, as well as being the world’s second-largest stockmarket in the early 1990’s, it was also one of the most inefficient. The immediate success of the ‘market neutral’ equity fund was proof that “one man’s inefficiency is another’s profit opportunity”. Within a year, the fund had returned 24% and investors started pouring money into the fund. The investment possibilities in Japan continued to be so rich that it remained Ikos’ main focus for four years, although they also launched a currency fund. The global market collapse in the wake of tech bubble burst of 2000 prompted them to expand into the European and US markets, where the bear years provided a whole additional suit of juicy profit opportunities.

The successful hedge fund went from strength to strength and in 2004 Elena paid herself just over $26 million in salary for 2004, a move that made her the headlines of being "The Highest Paid Woman in Britain." Then their relationship turned south, and Coward and Ambrosiadou might take the fund that they built together down with it.

The name "IKOS" translates as "household" from Ambrosiadou's native Greek. Coward oversaw all of IKOS's trading activity with Ambrosiadou managing the day-to-day administration of the funds, including client relations and standing out as the public face of IKOS as it grew in assets. Their relationship turned famously combative and especially Ambrosiadou’s management style of “take it or leave it” where she would impose her will on all employees, forcing them for example to re-domicile the fund from London to Cyprus in 2004 for tax reasons, was causing much resentment.

By 2008 the mutual animosity between Coward and Ambrosiadou reached new heights when the 52-year old Coward acquired himself a new travel partner, a 23 year-old Brazilian named Leiana. "She hasn’t got much of a head for business, but she does like topping up her tan,’ says a friend of Coward’s new girl-friend. ‘Naturally, Martin is very proud of her.’

Ambrosiadou was predictably not amused. While Coward was on a ski trip, she fired a 12-strong Ikos research team which reported to and was loyal to her husband, confiscated the Ikos private jet he was using and promptly thereafter filed for a divorce in her native Greece, instead of London.

Around the same time a woman named Laura Maria Van Egmond moved to Cyprus next to an employee of IKOS that was loyal to Coward, befriended both he and his wife, and pumped them for information on IKOS. She was really Laura Merts, an Israeli military-trained employee of a London-based corporate intelligence firm hired by Ambrosiadou to infiltrate the part of IKOS she believed loyal to her husband.

Ambrosiadou then went on to purchase the world's largest private sailing yacht, a 289 craft named The Maltese Falcon, rumored to have cost almost $120 million. Given that the couple’s estimated fortune is a “mere” $400m, it would seem that she is either suffering a major mid-life crisis of her own or deliberately throwing the money out of the window in some act of revenge.

In the immediate aftermath of these events the couple launched 58 different law suits in several jurisdictions against each other. The key of these are a law suit by Amborsiadou to prevent Coward launching a competing hedge fund using the Ikos software (she already secured an injunction on the trading software) which she claims he stole and a corresponding law suit by Coward over this software, which he claims to have developed and owns. The law suits are naturally also about division of the fortune of the fund, which Coward’s lawyers claim belongs to both of them, suing Ikos for a seven-digit sum. The relationship has turned “toxic” and Ms Ambrosiadou attempted to take her estranged husband to prison for stealing the software from the company, put Coward’s home under surveillance and put a GPS tracker on his car.

Last week the couple were at the High Court in London to start the latest round in their five-year fight. The court heard that the software at the centre of the battle was the “bedrock” of the fund. Dr Coward admitted copying its code before leaving the business. Ikos has said that it used legitimate investigative techniques to protect its investors' interests and technology after discovering the theft of confidential information. The ruling is expected this summer.

In the meantime, the investors who haven’t lost their nerves (the assets under Ikos’s management are now down to EUR2.5bn) continue to enjoy rich returns, estimated at 35% for the last fiscal year…

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