IN ASSOCIATION WITH
Founder, Centaurus Advisors, Houston
J ohn Douglas Arnold, 37, started out trading natural gas for Enron. After its demise he used the bonuses to start his own fund in 2002. Arnold’s investment philosophy is to seek assets that have deviated from fair value and bet on them returning to fair value. One trade in 2007 is said to have made 200% from being short of gas – when being long of it was what wiped out Amaranth. Centaurus now owns gas cavern storage capacity that gives it the same edge as other physical traders: it can provide and take
physical delivery, and avoid getting squeezed. Returns have never been below 50% a year. He reportedly made $1.5 billion in 2008. Arnold is now running the largest energy hedge fund at $5 billion. The fund is now closed, and having already made compulsory distributions to investors, it may well end up, like Jim Simons’ Medallion, being owned solely by its staff.
Mark Hart III
Founder, Chairman and Chief Investment Officer, Corriente Capital Advisors, Fort Worth
T exan Mark Hart III may have been one of the first hedge fund managers to start shorting developed government debt, at a time when most hedge funds were far more interested in shorting corporate and mortgage related credit. The concept of shorting bonds normally defined as risk free remains unusual, but has proved highly profitable. This trade - a joint venture with Hong Kong based Gavekal in the European Divergence fund - nearly doubled investors’ money in 2008 from
owning credit default swaps on sovereigns, including Portugal, Spain and Greece. The funds are also unusual in only charging performance fees on realised profits and in having voluntarily returned some capital to investors. It is only in 2010 that Greek credit spreads have reached record levels, so clearly Hart’s idea was prescient. Little wonder, then, that Hart likes to keep his ideas secret, including a new fund due to launch over the summer, which will not be a collaboration with Gavekal.
Principal, West Spring, New York
R alph Nacey started West Spring with Eric Phillipps in 2009 with seed capital from London-based FCA, part of FRM, one of the world’s biggest funds of funds. Nacey was previously chief investment officer of Brigadier Capital, a fundamentally driven credit fund that demonstrated strong returns both during the bull market and the credit crisis. He had previously structured derivatives at Credit Suisse and Merrill Lynch, and also done some proprietary trading for Merrill, after starting his investment banking career
in equity capital markets and M&A. West Spring focuses mainly on taking long and short positions in high yield and investment grade debt, but can sometimes trade asset backed securities, interest rate swaps and equity options. Phillipps’ and Nacey’s approval is required for trade execution; the two have worked together since 2002. Their big picture outlook is that the deleveraging cycle has some way further to run. Nacey studied Physics and Nuclear Engineering at West Point and served as an Airborne Ranger in the U.S. Army.
Founder, Pia Capital, New York
C hris Pia spent his college holidays interning at COMEX, the commodities exchange in New York. He met Louis Bacon when they were both at Shearson in the late 80s and this partnership progressed with Pia joining Bacon when Moore Capital was founded. Between 1996 and 2008, Pia is said to have sextupled investors money: that is, multiplied it by a factor of seven. He is responsible for AUM of over $1 billion. In late 2008, at the climax of the credit crisis, Pia teamed up
with ex-Tudor manager, Joe Niciforo, and the pair managed to pull in $800 million during what were generally very challenging conditions for asset raising. Late last year, Pia was bullish on oil and gold, and bearish the dollar
but his views could have changed since then. Pia trades with a medium
term time horizon of between weeks and months. He has continued with Moore’s strict stop loss policy of 3% at the position level.
Founder, Plural Investments, New York
A t $450 million, the launch of Plural Investments was one of the largest of 2008. Founder Matt Grossman was formerly at Steve Cohen’s SAC and had also covered energy stocks for Julian Robertson’s Tiger. At SAC Grossman had been Chief Investment Officer of the $2 billion CR Intrinsic fund, which is reputedly largely comprised of Cohen’s personal wealth. Grossman had often been described as Cohen’s right hand man: it was considered a great privilege to be involved in
the running of Cohen’s favourite fund. Grossman hired other analysts and portfolio managers from Citadel, Omega and Highbridge rather than taking his old team. Filings show that railroads were a key 2009 theme: he owned the whole sector, which was boosted by Warren Buffet’s acquisition of Santa Fe. Plural was also long of gold, oil and Goldman Sachs. Grossman is proud to have been a client of the late celebrity psychiatrist Dr Ari Kiev, who strove to help athletes and financial traders attain optimum performance.