Ten Years of Absolute Return: Top 10 of 2003

By Lawrence Delevingne

Wed May 29, 2013

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How did the largest hedge fund firms in 2003 fare over the past decade? Absolute Return looks back on a decade of gains and losses at the first Billion Dollar Club's ten biggest names.

Caxton Associates

Caxton Associates
2003* 2013
Leadership Bruce Kovner Andrew Law
Assets ($B) $10.50 $6.50
BDC Rank #1 #64
Flagship performance 
2003 to 2012
Caxton Global Investment
99.3% cumulative
7.14% annualized

Macro firm Caxton was at the top of the hedge fund world in 2003, thanks to a string of double digit returns under the leadership of founder and hedge fund pioneer Bruce Kovner. But a combination of more difficult markets and increased risk management under 2003 hire Andrew Law muted returns and some investors left. Law took over as CIO in 2008 and has an obsession with risk management, according to an AR cover story in February 2012. Founded in 1983 by now-retired Kovner, Caxton still has substantial heft and global reach: a staff of approximately 195 people, including traders, research analysts and administrative personnel in its offices in New York, Princeton, London and Sydney.

Andor Capital Management

Andor Capital Management
2003 2013
Leadership Dan Benton
Assets ($B) $9 $1.2
(regulatory assets)
BDC Rank #2 Not listed
Flagship performance
Jan 2003 to Jun 2006
Andor Technology Offshore
1.21% cumulative
0.34% annualized

Dan Benton's Andor was a top technology investor with $9 billion in assets and 170 employees. He grew quickly after leaving Pequot Capital Management to launch Andor in 2001 with a mission to " build the world's pre-eminent hedge fund institution." But for all the fast growth, Andor stumbled. Performance was poor in 2003 and Benton shut all but his technology funds as chief investment officer Chris James left to form Partner Fund Management. Andor declined to about $2 billion by 2008 following poor performance and Benton announced his retirement and the firm's liquidation. But there's a second act: Andor was reopened in 2011 and has quickly attracted assets.

Cerberus Capital Management

Cerberus Capital Management
2003 2013
Leadership Stephen Feinberg
Assets ($B) $8.12
(all assets)
$8.9
(hedge funds)
BDC Rank #3 #48
Flagship performance
2003 to 2012
Cerberus Partners & Cerberus International Composite
142.96% cumulative
9.28% annualized  

Cerberus, best known for its private equity funds, grew quickly during the decade. Overall assets increased from $8.12 at the end of 2002 to about $24 million today, with hedge funds representing $8.9 billion. In 2008, Cerberus scooped up mortgage trading veterans Josh Weintraub from Bear Stearns and Scott Stelzer from Morgan Stanley. Weintraub's residential mortgage backed security hedge fund has performed well since launching in 2011, rising to $2.1 billion in assets as of January. Stelzer is preparing the launch of a dedicated commercial MBS vehicle. Generally, Cerberus has more than doubled the number of employees to 349 (132 on the investment side) in the last 10 years, expanding its global presence, opening offices in London, Frankfurt, Beijing, Madrid, Amsterdam and Chicago. Cerberus funds invest using four primary strategies: distressed securities and assets; control and non-control private equity; commercial mid-market lending and real estate-related investments.

Citadel

Citadel
2003 2013
Leadership Ken Griffin
Assets ($B) $8.5 $13
BDC Rank #4 #26
Flagship performance
2003 to 2012
Citadel Wellington
195.09% cumulative
11.43% annualized

Ken Griffin was well on his way to creating the global, diversified financial services company he envisioned. The firm hit $20 billion under management in early 2008 and enjoyed a commanding position in trading technology. Then the financial crisis hit, cutting the value of Citadel's flagship multistrategy hedge funds in half. In response, the firm shed secondary strategies and lines of business in early 2009, refocusing on equities, interest rates, energy, convertibles and fundamental credit. In December 2008, Absolute Return wrote a feature asking if Citadel could come back. Three years later, the Chicago-based firm largely had, clearing its high water mark. The firm also sold its hedge fund administration business to Northern Trust in 2011 and exited its investment in E*TRADE Financial Corp. Citadel was also the big winner at the 2012 Absolute Return Awards,picking up three trophies including the Fund of the Year prize.

Angelo, Gordon & Co.

Angelo, Gordon & Co.
2003 2013
Leadership John Angelo, Michael Gordon
Assets ($B) $8 $17.66
BDC Rank #5 #15
Flagship performance
2003 to 2012
AG Super Fund
149.92% cumulative
9.71% annualized

John Angelo and Michael Gordon's Angelo, Gordon & Co. continued to use its expertise in credit, real estate and private equity to grow its hedge fund offerings. The firm manages $24 billion overall today, including $17.6 billion in hedge funds. The flagship AG Super Fund is co-managed by Gordon and David Kamin and invests across strategies, including special situations, distressed debt, convertible bonds and real estate. The firm also grew in 2006 by acquiring $3 billion ForstmannLeff, a traditional long-only equity manager that was rebranded AG Asset Management. Angelo, Gordon expanded its executive committee in 2012 from five to nine people and in 2013 made 20-year veteran David Roberts chief operating officer. The New York-based firm now has more than 280 employees, 100 of them investment professionals, in nine offices globally.

Moore Capital Management

Moore Capital Management
2003 2013
Leadership Louis Bacon
Assets ($B) $8 $13.5
BDC Rank #6 #25
Flagship performance
2003 to 2012
Moore Global Investments (Class A)
200.02% cumulative
11.61% annualized

Launched in 1989, Moore was well-established in 2003. Founder and principal Louis Bacon grew his macro firm to peak assets of $20 billion in mid-2008 by making big, successful bets on macroeconomic trends. But investors redeemed $5 billion in 2008 despite the flagship fund falling just 4.32% for the year; Moore imposed no gates or side-pockets. Bacon also impressed investors by giving back about a quarter of his flagship fund's assets-- $2 billion--last year, citing constrained opportunities and political risks to markets. Secretive Bacon shuns publicity but still occasionally appeared in the press: alleged market manipulation and insider trading by former employees; a spat with a neighbor in the Bahamas; and major environmental conservation efforts. Among other post-crisis hires, Bacon added Greg Coffey from GLG Partners in 2008 as co-chief investment officer for Europe to expand emerging markets investing, but Coffey retired last year after a losing stretch. As AR noted in a 2011 cover story, " Macro maestro," the future may be in the Moore Macro Managers Fund, which is run by a group of PMs other than Bacon. That fund has annualized at 13.86% since inception in 1993. Moore employs 387 people today--184 work on investing--in its New York headquarters and satellite offices in Washington, D.C., London and Hong Kong.

Farallon Capital Management

Farallon Capital Management
2003 2013
Leadership Tom Steyer Andrew Spokes
Assets ($B) $7.8 $18.6
BDC Rank #7 #13
Flagship performance
2003 to 2012
Farallon Capital Partners
121.76% cumulative
8.29% annualized

Already big in 2003, Tom Steyer grew Farallon to $36 billion by 2008, making the San Francisco firm the third largest in the country. Part of the growth was spurred by a decentralized culture, including the launches of affiliates Noonday Global Management in 2004 and FKG Capital in 2011. But when Farallon lost money for the first time in 2008 as the flagship fund fell 36%, Steyer moved to centralize control and increase transparency. Steyer retired in 2012, completing a long-term succession plan that placed deputy Andrew Spokes in charge. Farallon has grown from 80 employees in three offices in 2003 to 170 in six today (satellite offices include London, Singapore, Hong Kong, Tokyo, and Sao Paulo). Democrat Steyer is now engaged in politics and philanthropy, especially environmental causes and community banking.

Maverick Capital

Maverick Capital
2003 2013
Leadership Lee Ainslie
Assets ($B) $7.2 $9
BDC Rank #8 #45
Flagship performance
2003 to 2012
Gross composite of all Maverick funds
138.4% cumulative
9.1% annualized

Tiger Cub Lee Ainslie's Maverick roughly doubled its assets from 2003 to 2008, when the Dallas-based firm managed $14.2 billion. But like many equity-oriented funds, returns suffered in 2008 when the flagship Maverick Fund lost 26.49%; assets fell by more than a third to $9 billion in January 2009. Maverick's performance also declined 14.85% in 2011 but gained 15.46% in 2012. Last year, Maverick also introduced a new quantitative system to complement its fundamentally-oriented approach and subsequently launched Maverick Select, a concentrated version of the flagship equity fund.The firm also expanded its private equity strategy and launched a hedge fund seeding vehicle in 2011, making three investments to date, including inlong/short value shop Sycamore Lane Partners. There has been some turnover: Steve Galbraith and Gunnar Overstrom, two of the firm's 16 partners, left last year and are starting firms of their own. Today, most of the firm's 80 employees (10 on the investment side) work out of Dallas and New York, with additional offices in London, Charlottesville, Hong Kong, Minneapolis, Philadelphia, San Francisco and Taipei.

Tudor Investment Corporation

Tudor Investment Corporation
2003 2013
Leadership Paul Tudor Jones
Assets ($B) $7.5 $11.3
BDC Rank #9 #32
Flagship performance
2003 to 2012
Tudor BVI Global Fund
127.01% cumulative
8.54% annualized

Paul Tudor Jones' macro firm was firmly established in 2003 after 23 years in business. The Greenwich-based shop continued to grow, opening offices inSingapore (2004) and Sidney (2005) and adding new strategies, most notably the quantitative Tudor Tensor Fund (launched in 2005, it now manages morethan $900 million). By mid-2007, Tudor was a $20.96 billion multistrategy juggernaut and the ninth largest hedge fund firm in the country. That turned out to be a high point for Tudor's assets. In 2008, star equity manager Jim Pallotta left following poor returns. When the financial crisis hit later that year, Tudor's portfolio froze up in part because of emerging markets corporate credit positions. As AR noted in a 2010 cover story, " Tudor returns to its roots," Tudor Jones stepped in and was able to limit flagship fund losses to just 4.86% in 2008 but had to suspend redemptions and side-pocket some assets. Since the crisis, Tudor has been a more conservative--and lower returning--firm refocused on the macro investing that made its founder a star. The flagship Tudor Global Fund celebrated its 25th anniversary in 2011 and firm partners have seeded two spinouts: Two Sigma Investments (2001) and distressed debt focused Stone Lion Capital Partners (2009). The Tudor Discretionary Macro Portfolios, launched in 2012 and run by portfolio managers other than Tudor Jones, crossed $1 billion in assets earlier this year.

Soros Fund Management

Soros Fund Management
2003 2013
Leadership George Soros Scott Bessent
Assets ($B) $7.2 $24 (est.)
BDC Rank #10 n/a
Flagship performance
Jan 2003 to Jul 2012
Quantum Endowment Fund
184.13% cumulative
11.62% annualized

George Soros' firm continued to grow during the last decade but it was mostly the hedge fund pioneer's own money by July 2011. That's when he decided not to deal with the hassle of new government reporting and returned the less that $1 billion of outside capital. Chief investment officer Keith Anderson left and was later replaced as CIO by former employee Scott Bessent. It had been quite a run for Soros' flagship Quantum Endowment fund, which reportedly averaged returns of 20% a year since inception 1969 until it became a family office, according to Bloomberg. Soros returned to trading during the credit crisis and made nearly 10% in 2008. The same year Soros published a best-seller, the " New Paradigm for Financial Markets," and successfully supported Barack Obama for president. Soros may be out of the traditional hedge fund game today, but he remains highly engaged in philanthropy and politics.

See also: Absolute Return Billion Dollar Club rankings (2003-2013)

* All 2003 assets are as of December 31, 2012.

ISSN: 2151-1845 / CDC10004H