And retail investors hope to have any chance in this market where the big boys can no longer cut it? Good luck.
Aug. 18 (Bloomberg) -- Stanley Druckenmiller, the hedge- fund icon who boasts one of the best long-term trading records and the distinction of having made $1 billion for George Soros by forcing a devaluation of the British pound in 1992, is closing his firm after 30 years.
Druckenmiller, 57, said he was tired of the stress of managing money for others and frustrated by his failure in the past three years to match returns that had averaged 30 percent annually since 1986. His Duquesne Capital Management LLC, which oversees $12 billion and has never had a losing year, is down 5 percent in 2010.
“Managing more than $10 billion seems to challenge my long-term standard” for investment performance, Druckenmiller said in a two-hour interview in his New York office on 57th Street overlooking Central Park. “For 30 years I’ve been responsible for managing client money and it’s been a joy, but at some point I need to move on. Thirty years is enough.”
“While the joy of winning for clients is immense, for me the disappointment of each interim drawdown over the years has taken a cumulative toll that I cannot continue to sustain,” he wrote to his 100 clients today.
Druckenmiller built his reputation making large bets on macroeconomic themes that he spotted before others, a skill he shares with legendary traders including Bruce Kovner, Michael Steinhardt and Soros, the Hungarian-born billionaire and his former boss. The decision to shut Duquesne suggests that in an era in which the biggest hedge funds oversee $30 billion and are adding even more assets, they may no longer be able to routinely outperform conventional funds by wide margins.
Duquesne returned about 11 percent in 2008, when hedge funds on average lost a record 19 percent, and rose about 10 percent in 2009, when the average gain was 20 percent.
“I felt I missed a lot of opportunities in 2008 and 2009, and a huge move in bonds this year,” he said. In the past three years, his returns have trailed those of the 10 portfolio managers who manage about half of Duquesne’s capital -- a first.
Druckenmiller said he’s been thinking about retiring since he left Soros Fund Management LLC 10 years ago. He became serious about the idea three or four weeks ago, when Johann Rupert, a friend and chief executive officer of Cie. Financiere Richemont SA, the world’s largest jewelry maker, invited him to play in October at the Alfred Dunhill Links Championship in Scotland, a golf tournament in which both professionals and amateurs compete.
Druckenmiller declined, saying he couldn’t leave the office, given the history of volatile markets in October.
“Are you crazy?” was Rupert’s reply, according to Druckenmiller. “You’ve been doing this for 30 years. You are a billionaire. You can’t take a couple of days off to play golf?”
“I’d had that same thought a hundred times,”
Druckenmiller said. He said almost every family vacation had been interrupted by a work emergency.
Druckenmiller will create a family office overseeing some of his fortune, estimated at $2.8 billion by Forbes magazine, when he winds down the firm and returns money to clients sometime in 2011.
“I plan on managing a decent chunk of my money, but only an amount that will be fun,” he said. He will invest with Duquesne portfolio managers who are planning to open their own hedge fund.
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