Institutional Investor's Alpha Magazine - April 2009 - (Page 46) The Top 25 Moneymakers KENNETH TROPIN GRAHAM CAPITAL MANAGEMENT $120 MILLION Trend-following was one of the few winning strategies of 2008, and Ken Tropin was among its most successful practitioners. All 13 of his funds at Graham Capital Management made money — including the one third of his assets that are described as discretionary — enabling him to return to the top-earners list for the first time since 2003. Most of his funds racked up big double-digit returns, ranging from 20 percent to 52 percent. The $4.7 billion Rowayton, Connecticut–based firm reaped profits in a variety of areas — commodities, currencies, equity indexes and fixedincome assets. Its equity bets did especially well when prices dropped in the first and fourth quarters. Tropin was helped by a move in the Japanese yen against the U.S. dollar. His firm also profited in metals and soft commodities. Tropin, 55, founded Graham Capital in 1994 as a quantitative macro hedge fund after nearly five years at the helm of managedfutures firm John W. Henry & Co. was timely. They had a breakout year, more than tripling their clients’ money after opening London-based BlueGold Capital Management in February 2008. The duo generated a stunning 209.7 percent net return in just 11 months by betting on the right directions of oil, natural gas and coal to make their debut on Alpha’s list of top earners. Drawing on both fundamental research and technical analysis, Andurand and Crema profited from the rising energy markets in the early part of the year. Following a difficult July, in which their fund was down 19 percent, they deftly switched to the short side as prices fell. Andurand and Crema honed their considerable investment skills at privately held Vitol Group, the world’s biggest oil trading company. Andurand, 32, a Frenchman with a master’s degree in international finance and an engineering degree in applied mathematics, was an energy derivatives trader at Vitol from 2003 to 2007, first in Singapore and then in London. In 2004 he was one of the first traders to call for a demand-based rally in oil prices to $100 a barrel (it was then trading at about $30). Andurand is chief investment officer and a managing partner of BlueGold. Crema, an American, built up a 50-person team of energy traders during his 12-year stint at Vitol in London, focusing on both the physical and derivatives markets. Before joining Vitol in 1995, Crema, now 48, spent four years at petroleum refiner Tosco Corp. in Philadelphia. At BlueGold, Crema, who has a bachelor’s degree from Hofstra University in Hempstead, New York, is CEO, head of the risk committee and a managing partner. PIERRE ANDURAND BLUEGOLD CAPITAL MANAGEMENT $90 MILLION DENNIS CREMA BLUEGOLD CAPITAL MANAGEMENT $90 MILLION The launch of an aggressive new commodities-trading hedge fund by Pierre Andurand and Dennis Crema Capsized (But Alive) T his year’s shake-up in our annual ranking of the world’s top hedge fund earners is by far the biggest in the list’s eight-year history: Fifteen of last year’s top 25 managers failed to make the ranking this time. Many of them lost hundreds of millions of dollars of their personal wealth, as their funds fell by double digits, and they are unlikely to start collecting performance fees again before 2010 (see “Eight Men Out,” page 44). Several managers who missed the cut this year didn’t perform poorly. Though they were down, they remain positioned potentially to start making money again in 2009. Among them are a litter of so-called Tiger cubs (managers who at one time worked for Tiger Management Corp. founder Julian Robertson Jr.). They include O. Andreas Halvorsen of Viking Global Investors, whose funds were down less than 1 percent; Chris Shumway of Shumway Capital Partners, down 8 percent; and Blue Ridge Capital’s John Griffin, down 8 to 9 percent. Others with losses in the single digits: Israel Englander, whose Millennium Partners fund was down 3.3. percent; Moore Capital Management’s Louis Bacon, whose Global Investments fund fell 4.3 percent; Tudor Investment Corp.’s Paul Tudor Jones II, whose Tudor BVI Global Fund dropped less than 5 percent; Joseph DiMenna, whose Zweig-DiMenna International fund was off less than 6 percent; and Eric Mindich, whose Eton Park Overseas Fund was down 9.8 percent. Most of these managers are long-short equity buffs who specialize in undervalued securities, a strategy that was not treated kindly by the markets in 2008. It is not uncommon for the Tiger cubs to perform similarly since they frequently invest in some of the same companies. At year-end Griffin, Halvorsen and Shumway (as well as Lone Pine Capital’s Stephen Mandel Jr., whose funds were down by double digits) all had Mastercard among their top ten holdings. DiMenna and Mindich, for their part, seemingly like to make sector bets with exchangetraded funds. At the end of the fourth quarter, DiMenna’s two biggest holdings were Nasdaq 100 Trust Series 1, which mirrors the Nasdaq 100 index, and SPDR Trust Series 1, a tracking stock for the Standard & Poor’s 500 index. — S.T. CHRISTOPHER ROKOS BREVAN HOWARD ASSET MANAGEMENT $90 MILLION Chris Rokos, the “R” in the Brevan of Brevan Howard Asset Management, played a big role in the 21 percent return posted by the London-based firm’s flagship $16 billion multistrategy fund last year. A former fixed-income derivatives trader at Credit Suisse 46 • INSTITUTIONAL INVESTOR’S ALPHA • APRIL 2009 Illustration by Shout
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