By Alistair Barr
SAN FRANCISCO (Reuters) - Noted short seller David Scially of Kingsford Capital Management LLC is retiring at the end of this year, after more than a decade running the investment firm with partner Mike Wilkins, according to two people familiar with the situation.
Scially decided to leave to spend more time with his family, after taking a break this summer to consider his plans, one of the sources said.
Scially oversaw a big portion of Kingsford's assets under management, but the firm has had some time to prepare for his departure, the people said. They did not want to be identified because Kingsford, which is based in the San Francisco Bay Area, is a private investment firm.
A representative at Kingsford declined to comment.
Scially and Wilkins, who are general partners of the firm, comb through the balance sheets and income statements of mainly micro-cap companies looking for symptoms of over-valuation or fraud.
They are held in high esteem by other short sellers, partly because their research effort is focused on so many different short ideas.
"Dave researched a lot of companies thoroughly and carefully and was highly regarded for that reason," said David Rocker, who ran short-selling hedge fund firm Rocker Partners before retiring himself in 2006. "When I was in business we would see each other at conferences and share ideas periodically."
Rocker said David Einhorn, head of hedge fund firm Greenlight Capital, has risen to prominence as a leading short seller in recent years, partly because he speaks publicly about some of his bets against stocks.
"Dave was not outspoken - he would do his work and not be a public advocate of his positions," added Rocker. "Some people prefer that approach."
Scially's departure comes at the end of what has been a tough year for short sellers, who bet on stock declines. The Standard & Poor's 500 index is up more than 10 percent so far this year.
Through the first three quarters of 2012, returns of all types of hedge funds trailed the S&P 500, according to firms that track industry performance. Short-biased hedge funds, which have more short positions than long positions, were down 18 percent this year through October, according to data from Hedge Fund Research.
Before starting Kingsford with Wilkins in late 2001, Scially worked at Off Wall Street Consulting Group, a Cambridge, Massachusetts-based research firm that unearths buy and sell recommendations, often for hedge fund clients.
Kingsford Capital oversaw roughly $2 billion at one time, according to one of the people familiar with the situation. It was not immediately known how much money the firm manages currently.
A Securities and Exchange Commission filing in January showed the firm had raised $400 million from investors for a fund called Kingsford Capital Partners LP.
(Reporting by Alistair Barr; Editing by Andrew Hay and Tim Dobbyn)