Old Guard Exits Changing Industry

Chidem Kurdas

Caxton Associates’ founders Bruce Kovner and Peter D’Angel issued the latest in a series of retirement letters by well-known hedge fund managers. Exiting managers give different reasons for their decision, but in the main they’re tired of dealing with at least one of three temperamental forces—-markets, clients or regulators.

When Arthur Samberg shuttered Pequot Capital in 2009, he cited the SEC insider trading investigation. More recently, Stanley Druckenmiller blamed difficult market conditions while George Soros pointed to the Dodd-Frank Act’s new registration requirement.

In the past three years, markets, clients and regulators have all become more demanding. The field is more crowded; competition is intense for capital; reliable trades are hard to find; regulators figure out new ways to interfere.  Markets have become prone to bubbles, busts and crises. Customers want a lot of explanation.  Regulators are gunning for violations to prove they’re tough.

Retiring from managing other people’s money saves you the headaches caused by clients and regulators.  More importantly for some, it reduces the impact of headaches caused by markets, because you don’t have to explain anything if you invest just your own money.

Not surprisingly, managers who’ve been around and don’t have to face the heat any more decide they won’t. As for the rest—-many hope they’ll be wealthy enough to retire before long.


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One Response to “Old Guard Exits Changing Industry”

  1. Popular Funds Disappoint « HedgeFundSmarts Says:

    […] a double-digit earner in the crisis, lost heavily in 2009 and has been lackluster since. In 2011 founders Bruce Kovner and Peter D’Angel announced their retirement. 2012 was another […]

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