Billionaire investor Louis Bacon made one of the biggest profits of his long trading career during the market turmoil of 2020, helped by a decision to return money to outside investors, which paved the way for riskier bets.
The firm of veteran fund manager Moore Capital, which now mainly manages money for Mr. Bacon and other employees, gained more than 70% last year, people familiar with its performance said after enjoy during the coronavirus crisis last March and its consequences. Moore’s earnings were worth billions of dollars, one person said.
Moore, who cited a “difficult business model” when tell investors At the end of 2019, it was closing its flagship hedge funds to outside money, was aided by a new ability to take more risk and tolerate more volatility in its performance, one of the people said.
Large institutional investors, who have dominated the hedge fund industry’s clientele since the financial crisis, provide huge inflows but tend to be more risk-averse and have often tried to limit traders’ bets. Such constraints can cap losses but also limit gains.
Moore’s returns in 2020 would have ranked him among the the most efficient hedge funds, in what has become the industry’s best year since the aftermath of the financial crisis.
Moore declined to comment.
Mr. Bacon’s performance echoes that of Michael Platt’s BlueCrest Capital, which announced in late 2015 that it would transform into a family office to primarily manage the money of Mr. Platt and other staff. Mr Platt said at the time that his bets were limited by institutional investors and that the return of outside money would allow him to take more risk. His business continued to record earnings by around 50% or more in 2016, 2017 and 2019.
Mr. Bacon began his career in the 1980s and is known to make big profits during episodes of market volatility, such as the Japanese stock market crash in 1990 and Black Wednesday in 1992 when the British pound was expelled from the European exchange rate mechanism.
The manager said in 2019 that returning outside money would allow him “ more personal time for a big family, philanthropic activities and to continue to develop a number of sports-oriented properties – all with the flexibility of “ stay in the picture ” or not like things. develop. ”However, the tremendous levels of market volatility experienced last year meant he was heavily involved in Moore’s trading.
Mr. Bacon bought US government bonds in February, shortly before their soaring records as the Federal Reserve cut interest rates and investors fled to safe-haven assets. Moore was also able to later profit from betting on equity and debt of companies likely to come out of the crisis well while betting against those likely to suffer, one of the people said.
The fund manager, who still spends some of his time in the company’s London office in the heart of Mayfair, nearly doubled his money in his own trading portfolio over the year, while the other portfolio managers of the company earned about 60%, people said. .
The company is one of the best-known names in macro trading – where investors bet on the direction of bonds, currencies and stocks around the world. Macro hedge funds that posted one of their best performances ever in 2020 included Andrew Law’s Caxton Associates, who gained 42 percent, while Brevan Howard added 27 percent, said people who had seen the numbers.