Moore Capital, a Hedge Fund Too Big to Profit
The hedge fund titan Louis M. Bacon has made billions of dollars for himself and his investors over the years by placing big bets that allowed him to overcome and profit from one financial crisis after another.
But like many others, he has been stumped by the current debt crisis in Europe — so much that he has done what such titans rarely do: Admit defeat and return about $2 billion, or 25 percent of the main fund he manages at Moore Capital Management, to his investors.
It is hard to figure out how to invest when actions taken by politicians can affect financial markets more than basic economic factors, he said.
The difficulty in finding the right investment strategy has led to one of the worst performance periods of Mr. Bacon’s career, down 2 percent last year and up 0.35 percent through June of this year.
That stands in stark contrast to his past successes. Since its inception, Mr. Bacon’s main fund is up 18.3 percent, with some years, like 1990 and 1992, returning 86 and 45 percent.
At the root of his decision to return some investor money has been a frustrating inability to put on and execute a career-defining macro trade that would capitalize on the euro zone’s disintegration.