Stanley Druckenmiller one of the world’s most successful hedge fund managers, decided to stepdown this week, telling investors in a full and frank letter, "For me the disappointment of each interim drawdown over the years has taken a cumulative toll that I cannot continue to sustain.”
Druckenmiller, who left Soros Fund Management ten years ago to develop his own firm, USD12bn Duquesne Capital Management, says he left Soros because, “the challenge of managing an enormous amount of capital was having a clear impact on my ability to perform, as well as my state of being, Unfortunately, as Duquesne has grown, the same factors have emerged.”
Druckenmiller acquired expertise in making global bets on interest rates and currencies while working at Soros Fund Management. His NY-based Duquesne Capital Management focuses on selecting growth-oriented value stocks and has never had a losing year in its 30 years. Forbes magazine, in its 2009 ranking of the richest Americans, estimated Druckenmiller’s net worth at USD3.5bn.
But sustaining a successful trend over decades has taken its toll, with Druckenmiller telling investors, “I have had to recognise that competing in the markets over such a long time frame imposes heavy personal costs.”
Druckenmiller’s career and fortunes evolved along with those of a generation of hedge fund stars such as Louis Bacon (Moore Capital Management), and the three founding partners of London-based GLG Partners, co-chief executive Noam Gottesman, senior managing director Pierre Lagrange, and former partner Philippe Jabre, who created large and powerful multi-billion hedge fund groups.
As with other successful and fast-growing financial sectors, size and scale have imposed their own problems, with institutional investors demands for increased transparency and due diligence requirements often hampering and limiting managers’ ability to trade.
Changes are afoot as “generational change”, institutionalisation and the sheer burden of success impact the industry. GLG was acquired by Man Group earlier this year, with Jabre having left earlier to set up his own fund management operation in Switzerland.
There is still life in the old guard, but a new era is beginning and the search is on for the new kings of hedge funds. They may be a lot smaller this time around, but with institutional money chasing emerging stars and the recent launch of several well-funded seeding platforms, the time is ripe for the new generation to take their seats at the top table.
