Business

Eisman hit by losses amid departure talk

After a high-profile bet against subprime mortgages brought him huge profits, star money manager Steve Eisman is having a tough time extending his winning streak.

Eisman, a prominent hedge fund manager at FrontPoint Partners, has seen his assets under management fall along with fund performance in the past year.

Eisman’s FrontPoint Financial Services, which launched in 2004, was down 8.3 percent through Dec. 31, and FrontPoint Financial Horizons Fund slipped 7.7 percent. In 2010, the two funds were the firm’s worst performers, according to reports sent to clients.

The poor performances are coming to light while Eisman is in discussions with his firm about a possible departure, sources told The Post.

Sources said Eisman will exit before year-end, although he may not sever ties completely. He may reach an agreement with the firm to continue using its back-office functions, similar to arrangements the firm has reached with other departing fund managers.

Eisman has reportedly grown restless at FrontPoint, which has its own share of problems after getting ensnared in a hedge fund scandal involving another manager. At the same time, Morgan Stanley is planning to sell its controlling stake to comply with new financial rules.

Eisman’s assets under management have dwindled to about $725 million from $1.3 billion because of client withdrawals, although it’s unclear how much of that reflects his performance versus the larger issues facing FrontPoint.

Sources said that the insider-trading scandal has been particularly frustrating for Eisman, who is unhappy about the drag on his fund.

Morgan Stanley and FrontPoint spokesman declined to comment.