Star hedge fund manager Monroe Trout quits
By Svea Herbst-Bayliss
NEW YORK, Jan 17 (Reuters) - Monroe Trout, whose blockbuster investment returns made him an icon of the hedge fund industry, is quitting his firm, joining a handful of high-profile investors who walked away from it all before hitting middle age.
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The 39-year-old Trout ends his 14-year run at Trout Trading Management Co. Ltd. with one of the most enviable records in the business. His Bermuda-based $3 billion fund, which invests in currencies, stocks and bonds around the globe, rose 13.6 percent last year and boasts an average net annual return rate of 21.5 percent.
``This is part of the generational change,'' said Kevin Ferro, principal at hedge fund group Ferro Capital.
Trout, he said, was one of the original great futures traders who has made enough money to comfortably step away from the relentless pace and demands of the business.
Trout, colleagues say, never missed a day of work and never saw a down year.
Now Trout says he wants to spend more time with his family and pursue other interests. In the high-stakes hedge fund industry, this phrase is often the polite way of masking a forced exit after a trading fiasco. But a source close to Trout vehemently denied that.
``This has nothing to do with bad performance. It is quite the opposite,'' the source said. ``He really wants to spend more time pursuing interests outside of hedge fund management.''
In the close-knit hedge fund community, which caters to the wealthy, Trout built his reputation by becoming one of the first futures traders who managed a lot of money without big swings.
Hedge funds invest in a variety of markets, including commodities and currencies, and employ investment techniques off limits to most mutual funds, like betting on falling stock prices.
FROM TROUT TO TEWKSBURY
Trout will now hand over the reins to a younger man, Matthew Tewksbury. Trout Trading's chief executive. Tewksbury, 32, has been with the firm since 1992. The firm will be renamed Tewskbury Capital Management, if shareholders approve.
Investors got the news on Thursday. Investors often pull their money if a star manager leaves. But sources close to Trout said they expect few redemptions because the fund's performance is so strong and Tewksbury has been guiding day-to-day activities for some time.
While a man of Trout's age might just be hitting his stride in another industry, hedge fund investing can be so brutal that men of his generation are ready to pack it in.
Hedge funds have caught the eye of more mainstream investors like pension funds with promises to make money in all markets. Recently though, only a handful of funds like Trout's have delivered the outsized returns that made them famous.
Last year, the average hedge fund returned 4.4 percent -- a meager showing for the industry. But it beat the three major U.S. stock market indexes, which fell in 2001.
IN THE PATH OF OTHER FUND STARS
Now Trout follows in the footsteps of other famous hedge fund managers who retired early.
Two years ago, former Fidelity star manager Jeffrey Vinik shut his $4 billion fund after achieving returns of nearly 50 percent while he was in business. He now invests his own money.
Trout caught the investing bug early when a futures trader hired him, then a 17-year-old high school student, to type price data into a computer.
By the time he graduated from Harvard College in 1984, he had written his senior thesis on the stock index futures market and knew exactly what he wanted to do when he grew up.
Trout got started right away, trading futures and options for a Connecticut-based hedge fund and making his own investments on the side.
Industry analysts marvel at how Trout, who kept an extremely low profile among Bermuda's business elite and was very secretive about his trading strategies, produced one of the most consistent trading records in the business.
Even while other so-called global macro hedge funds produced dismal returns in 2000, Trout was up. And last year when these types of funds made a comeback, with an average 18.4 percent return, he was still up.
But investors also feel that the men who have made hundreds of millions will inevitably lose the edge and prefer to spend their time and money away from the screens.
``It's really a young man's business and that is why the life cycle of hedge funds can be relatively short,'' said James Torrey, chairman of the Torrey Group, which invests with younger hedge fund managers. |
