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Louis Bacon, founder and CEO of Moore Capital Management
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Longtime trader and hedge fund manager Louis Bacon is reportedly planning to shutter his firm and return capital to investors after 30 years of investment.
The impending end of Moore Capital will mark one of the industry’s most prominent closures to date and follow years of weaker performance at the hedge fund.
“The time is propitious to take a step I have eyed for some time and ‘privatize’ our three multi manager flag ship funds– that is to say returning client assets,” Bacon wrote in a letter to clients viewed by CNBC.
“Disappointing results of these funds of the last few years obviously inform this decision but our long term record is one we remain proud of,” he continued. “Intense competition for trading talent coupled with client pressure on fees has led to a challenging business model for multi manager funds such as ours.”
Moore has delivered a net annualized return of 17.6% and a cumulative return of over 21,000% since inception for its flagship Remington funds, but has returned low-single-digit gains in 2019 to date, the manager noted.
Bacon founded Moore in 1989 with a $25,000 inheritance from his mother and is considered one of the most successful traders of his era. Bacon popularized trading on a “macro” basis, making bets on everything from U.S. equity to European bonds and Asian currencies based on what he expected from the global macroeconomy.
In Moore’s first full year his wager that Saddam Hussein would invade Kuwait generated an 86% return, according to a letter Bacon wrote to document his firm’s first 20 years. The same letter also explained that, thirteen years later, Bacon’s accurate predictions on the market events surrounding the Iraq war would buoy fund returns 35%.
His fund also successfully bet against Japanese markets in the early 1990s and at one point managed more than $10 billion.
The most recent decade, however, proved a tougher patch for Bacon, who scrambled to match his historical returns thanks to persistently low interest rates. A Moore fund managed by Bacon reportedly declined almost 6% in 2018 amid two spikes in market volatility; another company fund overseen by other managers fell 3.3%, according to the Financial Times, which first reported Moore’s impending closure.
“Challenging trading conditions and muted returns for our macro multimanager funds of late masks a vibrant success at Moore in our Long/Short Equity platform, our Private Equity and Venture group, our Real Estate and our Speciality Lending businesses,” Bacon wrote in the letter to investors.
But he isn’t the only fund manager who’s struggled in recent years.
Billionaire Leon Cooperman announced the closure of his Omega Advisors in summer 2018, telling clients that he doesn’t “want to spend the rest of my life chasing the S&P 500.”
Fellow billionaire investor Jeffrey Vinik, who made a name for himself running Fidelity’s Magellan fund, told CNBC last month that he was closing his hedge fund less than one year since its relaunch.
“It has been much harder to raise money over the last several months than I anticipated,” Vinik said in a letter dated Wednesday to investors.
“The climate for raising long-short equity hedge fund assets has been far more difficult than I expected, and performance of the VAM funds, while good … has not provided the necessary momentum to bring in our desired level of investments.”
— CNBC’s Leslie Picker contributed reporting.