Coffey to go

October 18, 2012

By Chris Hughes

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Greg Coffey’s retirement at 41 from Moore Capital marks the end of the big personality era in hedge funds. The macro trader’s success was based on drive, personality and talent, plus the usual hedge fund ingredients – luck, leverage and high management and performance fees. His luck ran out at GLG Partners when the Lehman crisis hammered his illiquid positions. Clearly, something else has gone at Moore Capital.

Coffey’s personality was famous in the industry. He demanded a cup of coffee be delivered to his desk at the same time every day, even if he wasn’t in. There are also possibly apocryphal stories about his wrath towards cleaners who moved the carefully arranged mini-bottles of vodka on his desk. His personality attracted clients and other talented traders and the quirks went along with an intense trading style.

He also had an eye for privately-held emerging market assets that delivered colossal returns when they went public. But exposure to illiquid assets became a big problem when the crunch came. Coffey moved to Moore Capital, leaving GLG equity incentives on the table.

Moore acquired Coffey’s dedication and talent, which was deployed on more liquid strategies. The intensity came too: he sometimes turned over almost his entire portfolio in a day. Still, something has happened to make Coffey call it a day. In September, he made a 9 percent monthly return, erasing year-to-date losses to leave his fund flat. Rather than a sense of victory, Coffey felt that was a good moment to leave, according to a person familiar with the situation.

It’s not clear why Coffey’s drive has gone. Perhaps the reported $700 million of net worth de-motivated. Maybe Moore wasn’t the right environment. But the hedge fund world is becoming more institutionalised, with more emphasis on asset gathering and compliance. And less on big characters like Coffey.

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