Hassim Dhoda, a senior money manager at Louis Bacon’s Moore Capital Management, has left to start a hedge fund with the billionaire’s backing.
Dhoda, a former London-based trader at Moore’s European business who’d been with the firm for about a decade, is planning to begin a fund in the first half of the year focused on global macroeconomic trading. His Soluda Investment Advisors will begin trading with as much as $1 billion under management, including a personal investment by Bacon, according to a person with knowledge of the matter who asked not to be named because the matter is private.
A spokesman for Bacon’s $13 billion hedge fund firm declined to comment. Dhoda confirmed his plans when contacted by email.
“I feel that this is the right time to launch a global macro fund focused on longer term fundamental investing at a time when most investors are giving up on the macro space,” he said. “This period of central bank activity that has depressed returns is approaching a turning point, the global political cycle will lead to more volatility and there are large complex issues that we face,” including changes in technology, China, an aging population, and income inequality, he said. They make “the opportunity set really interesting for all asset classes.”
It’s been a tough time for macro players, with marquee fund managers — including Andrew Law, Alan Howard, Paul Tudor Jones, and Bacon — posting lackluster returns yet again last year. Even legendary investor Stan Druckenmiller, who boasts the best record in macro trading, said last month he’d had his worst year relative to market opportunities.
Macro funds, which trade everything from the euro to oil, have struggled to beat the broader market in recent years amid soaring stock valuations and ultra-low interest rates. They returned an average 3.8 percent on an asset-weighted basis in the first eleven months of 2017, making them the worst-performing strategy, according to Hedge Fund Research Inc. The industry returned an average 6.2 percent over that span, according to the research firm.
The dwindling trading profits, at a time when large investors are souring on high fees, have spurred managers to reshape their businesses. Jones, who dismissed 15 percent of his staff in 2016, recently decided to shut his discretionary macro fund at Tudor Investment Corp. John Burbank closed his flagship macro fund and Hugh Hendry shuttered his Eclectica Fund. Moore, which has slashed some of its management fees, also cut about 30 jobs in London in New York, Bloomberg reported in July. The firm said at the time that the reduction in staff was part of a response to the trading environment.
Bacon had told investors at the end of 2016 that he was “exceedingly upbeat” for the first time in several years about the “game-changing trading opportunities that lie ahead.” He pointed to President Donald Trump’s victory in the U.S. election and the prospects for higher interest rates, a stronger dollar, booming corporate sector and improving market liquidity. Ultimately, his flagship fund — which he runs personally — returned just 1.8 percent in 2017 through Dec. 21.
Still, it seems investors have been willing to buy the argument that macro’s back. Net asset flows into macro hedge funds were positive for each of the first three quarters of 2017, totaling $10.2 billion in new cash for the strategy over the period, according to HFR.