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The Morning Brief: Paul Tudor Jones on How to Get Back on Track
Paul Tudor Jones II has taken several steps to boost returns at his struggling Greenwich, Conneticut-based macro hedge fund firm, Tudor Investment Corp. For one thing, Jones himself will be managing more of the firm’s capital than he has in the recent past, according to Bloomberg, citing the firm’s August 16 letter to investors. He will now oversee more than 50 percent of the capital—including borrowed money—in the flagship fund, Tudor BVI Global Fund. In addition, he is urging his managers to take more risk.
“We have to think outside the box,” Jones reportedly said in the letter. “I firmly believe the changes we have made put us in a position to be successful even in this desultory macro environment.” We earlier reported that Tudor cut 15 percent of its staff after suffering about $2 billion in redemptions.
The firm now manages about $11 billion. According to Bloomberg, Tudor told clients it has introduced what it calls a chief-investment-officer tool designed to replicate its best managers’ trades. It also is more than doubling its gross Sharpe ratio target, which is a measure of risk-adjusted returns. Tudor BVI is down 2.3 percent this year through August 12. It also posted low single-digit gains in four of the five previous years.
Several of the macro funds it competes with are not faring much better. Andrew Law’s Caxton Global Investment, managed by New York-based Caxton Associates, is up 0.7 percent this year through August 16. In the past five years, it has posted one small loss and three low single-digit gains. Louis Bacon’s Moore Global Investments, managed by New York-based Moore Capital Management, is up 0.24 percent this year through early August and has posted single-digit gains in three of the four previous years.
Marcato International is back in the black. The activist fund, managed by San Francisco-based Marcato Capital Management, returned 4.8 percent this month through the halfway point. This puts the hedge fund up about 2 percent for the year-to-date.
Shares of hedge fund favorite Restoration Hardware Friday surged 11.2 percent, to $34.22, after Goldman Sachs reportedly upgraded the upscale home-furnishings retailer to a Buy and added it to the bank’s conviction list. Goldman also raised its price target from $37 to $40. At the end of the second quarter, New York–based hedge fund firms Miura Global Management and Samlyn Capital were among its top-ten shareholders after taking new stakes in the company.
Easy come, easy go. Shares of Och-Ziff Capital Management on Friday fell more than 5 percent one day after they surged nearly 7 percent following news that the embattled New York multistrategy firm earlier this year mulled the sale of all or part of the firm.