There are few signs of recovery yet at John Duffield's New Star Asset Management, which today revealed tumbling profits and admitted customers have deserted in droves.

The firm has been buffeted by some bad stockpicking by previously well-regarded fund managers amid a wider stock market downturn.

Founded by Duffield, who still has a 12% stake, New Star saw profit for the past six months down more than a third to £30 million.

Assets under management fell £3.3 billion to under £20 billion, £1 billion of which was due to redemptions by investors growing tired of the funds' poor performance.

New Star shares, which were chased upwards yesterday on rumours of stakebuilding, sank by 17p to 105½p today.

The shares have been as high as 420p this year before the company admitted it had fallen on hard times.

Duffield said: "The trading environment remains difficult and we do not expect conditions to improve in the immediate future."

He insists the long-term outlook for the company is good. Analysts say his track record at Jupiter Asset Management suggests he will get it right at some point.

There have been rumours in the City that Duffield is toying with taking the company private, which would enable him to conduct surgery on the business away from the glare of the stock market.

For now, he is shuffling some fund managers and firing others. Stephen Whittaker, once regarded as one of the best stockpickers in the industry, is one who has seen his wings clipped.

Duffield made £200 million from selling his stake in Jupiter to Commerzbank.

He has made no secret of his desire to make as much money as possible. When New Star floated in 2006, around 50 staff became millionaires.

New Star admitted earlier that its funds were "badly positioned" for the credit crunch, leading to them underperforming rivals by some way.