It's no secret that the hedge fund industry is having a hard time.
After a string of notable closures earlier this year, fund closures outnumbered new fund launches for a third consecutive quarter in Q1. Even as equity markets have moved relentlessly higher this year, a badly needed performance boost, most funds have still struggled to come anywhere near their benchmarks.
And with complaints from LPs growing louder, another hedge fund legend has decided to return all outside funds and convert into a family office. This time, it's Louis Bacon's Moore Capital. According to the FT, Bacon's decision to shutter the three Moore funds comes after several years of poor returns.
Currently, Moore's largest holding across its funds is Alibaba, with FB also in the top three.
Bacon was raised in North Carolina, and started his career in finance in the 1980s at Commodities Corp, where he first met other future hedge fund luminaries like Bruce Kovner and Paul Tudor Jones. Along with Steve Cohen (a notable exception to the prevailing trend in the industry, though he has fallen short of his fund-raising targets) and David Tepper, Bacon is seen as one of the best traders of his generation, known for his keen macroeconomic judgments.
However, like many others, he has struggled to match his historical performance since the financial crisis, as persistently low interest rates and low equity vol frustrated macro traders.
Last year, one fund managed by Moore posted a 6% drop, underperforming the S&P 500, after it struggled to recover from two explosions in equity volatility, while another fund was off 3.3%.
Bacon gained notoriety in the early 1990s, when his fund gained 86% in 1990 thanks to successful bets against Japanese markets, and 45% in 1992 when Bacon profited from the collapse of the European Exchange Rate Mechanism (like another prominent hedge fund billionaire we know all too well).
Through last year, Moore Capital had made $18.3 billion for investors since the firm’s inception, making it the 15th most profitable hedge fund of all time, according to data published by LCH Investments. The fund had $8.9 billion in assets as of recently after years of outflows.
Now, Bacon joins Leon Cooperman, Michael Platt, David Tepper and a raft of other big hedge fund names in converting to a family office. Over the course of his career, Bacon has earned a massive personal fortune of $1.5 billion.