MAY 3, 2012 10:59 AM
John Arnold, one of the most profitable traders in the hedge fund industry, has decided to shut down his Centaurus Advisors and return money to investors, according to people familiar with the matter. He joins a string of wealthy managers who have made such a move after much success.
Mr. Arnold, who burnished his reputation at Enron before starting his hedge fund in 2002, did not specify his reasons for shutting the fund, but said simply it was time to pursue other interests. With an estimated net worth of $3 billion, Mr. Arnold joins the ranks of big-money managers who can afford to walk away.
As both hedge funds and commodities trading face unprecedented new regulations and oversight, Mr. Arnold had been unable to reproduce the triple-digit gains that made him famous (and have left him with an average annual return in excess of 100 percent). In 2010, he experienced his first year of negative performance. Last year, while most hedge funds lost money, Mr. Arnold returned about 7 percent, according to the people.
Mr. Arnold, who is based in Houston, could not be reached for comment. The news was first reported by Reuters.
The elite but growing club includes the hedge fund pioneer George Soros, who returned cash to outsiders last year, as well as the activist investorCarl C. Icahn. Both men cited new regulations that would require hedge funds to register with the Securities and Exchange Commission.
Chris Shumway, a protege of the investor Julian Robertson, returned money to investors in early 2011 after a bid to hand off investing responsibilities prompted an investor revolt. And Stanley Druckenmiller, a protégé of Mr. Soros with an enviable track record, did the same in 2010, having grown weary of managing money for others.
While hedge funds continue to start up with vigor, particularly as banks shed their proprietary trading operations, the industry as a whole has fallen on hard times. Returns have lagged behind those of the Standard & Poor’s 500-stock index since 2008, the worst year on record for hedge fund performance.
As more money floods into so-called alternative asset managers, returns have become harder to come by, some industry watchers say. Volatile markets and unpredictable central bank interventions have also left many traders wondering how changes will affect their industry.
The most profitable managers in 2011, or those who personally earned the most, did so by eking out modest gains atop large pools of money. Of the 25 top-earning hedge fund managers in 2011, 11 had single-digit returns in their funds, according to AR Magazine, including Paul Singer of Elliott Management and Israel Englander of Millennium Management.
Adding to uncertain market conditions, hedge funds are also facing a wave of new regulatory oversight. Hedge funds that manage more than $150 million in assets must now register with the Securities and Exchange Commission, a process that requires them to disclose information about their businesses and strategies. Among those details are the names of their prime brokers and custodial banks, the ownership structure of their funds and how much money they manage.
Though it is unclear what prompted Mr. Arnold to close his shop, he did not file the new registration forms with the agency at the end of March, the deadline.
Commodities trading, too, is in the midst of big changes. In an effort to stem speculation, regulators are going to start enforcing position limits on traders, restricting the number of contracts that can be held in a given commodity. Among those markets was the one for natural gas, Mr. Arnold’s specialty, which has also been one of the hardest-hit commodities because of an unseasonably warm winter and excess supply.
using the number/letter grid:
1 2 3 4 5 6 7 8 9
A B C D E F G H I
J K L M N O P Q R
S T U V W X Y Z
A = 1 J = 1 S = 1
B = 2 K = 2 T = 2
C = 3 L = 3 U = 3
D = 4 M = 4 V = 4
E = 5 N = 5 W = 5
F = 6 O = 6 X = 6
G = 7 P = 7 Y = 7
H = 8 Q = 8 Z = 8
I = 9 R = 9
1685 195634 48
his path of destiny = 48 = Walking away from it all.
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