Billionaire Michael Platt, who decided to relinquish his external clients and about $7 billion in fee paying assets two years ago, is on a roll.
Free to take more risks and sweeten returns with borrowed money, the former hedge fund titan led his private investment firm to a 54 percent gain last year, according to a person with knowledge of the firm. The outsize return came on top of an almost 50 percent jump in 2016, BlueCrest Capital Management’s first year of trading with Platt’s and his partners’ money. A spokesman for the firm declined to comment.
Platt’s success contrasts with mediocre returns at some of the largest hedge funds in the world. Traders including Alan Howard, Andrew Law and Ben Melkman lost money last year.
“Investors are asking their managers to explain and justify their returns more often," said Nicolas Roth, head of alternative assets at Geneva-based Reyl & Cie. “It seems that getting rid of the monthly return pressure was the recipe of success for BlueCrest."
Hedge funds gained 8.2 percent on average last year following years of poor returns, according to preliminary estimates from Eurekahedge, raising questions over whether the firms are taking enough risks to make money for investors. BlueCrest’s returns are net of expenses. Hedge funds typically charge management and performance fees as well.
Leveraged Bets
The Jersey-based firm said in December 2015 that it would return client money — about $7 billion of the $8 billion it managed — and wanted to trade with high levels of borrowed capital. The decision followed investor withdrawals after years of middling returns and concern an internal fund run for employees could pose a conflict of interest. In 2016, Platt said that leverage had played a strong part in generating returns.
The investment firm went on a hiring spree to strengthen its rates, emerging markets and equities-trading units, a person said in 2017. Christian Dalban, who led the equities trading group at the firm, left last year. BlueCrest also raised the percentage of profits that its money managers can earn in an effort to hire and retain top traders, a person said in January 2016.
Below is a summary of returns for BlueCrest and other firms:
Sources: Investor letters, company information, * people familiar, # private investment firm.
This article was provided by Bloomberg News.
