Passport falls short
By Lawrence Delevingne
Mon Mar 26, 2012
After falling in love with John Burbank’s big bets, some investors worry he is now running a not-so-risky business.
Everything about John Burbank is big. He has expansive macro views on world economic deleveraging and the growing demand for natural resources. His $3.8 billion San Francisco firm, Passport Capital earned 219.7% in 2007 by being on the right side of the subprime credit fallout, and his flagship fund has produced a net annualized return of 19.2% since its August 2000 inception. And with his large frame and full beard, he has a commanding physical presence.
But ever since Passport’s near-death experience in 2008—when the flagship Global strategy lost 50.9%— Burbank has bet relatively small. Since then, the equity-focused macro strategy has had its substantial long gains muted by losing short positions that some investors attribute to an enhanced emphasis on risk management. The result, they argue, has been the flagship strategy’s underperformance during the past 36 months, during which it rose 3.4%...
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