Moore Capital Management never found an heir to founder Louis Bacon because, at least in part, Bacon didn’t want a successor.
“We tried it; we failed,” Moore Capital’s president Elaine Crocker said of succession planning during a Thursday session at the Cayman Alternative Investment Summit. “We didn’t try that hard to be perfectly honest.”
Moore Capital shocked many in the industry last fall by choosing to cease managing outside clients’ money after nearly 30 years in that business, and simply trade its own assets. The Financial Times first reported in November that Moore was closing down, which Crocker still disputes as inaccurate.
The media coverage — wayward or otherwise — “rushed us into returning client capital,” Crocker said. The organization transitioned to “30 traders trading the proprietary capital of the firm, which isn’t quite the same as closing.”
Successfully handing down the reins from founder to heir is the exception among hedge funds, not the rule. Crocker could think of only one firm to actually pull it off.
“It’s not so much the inability to succession plan — although I’d never say we’re great at it as an industry — it’s the desire of the manager,” said Crocker, who many see as an all-time great developer of hedge fund talent.
[II Deep Dive: She’s the Real-Life Wendy Rhodes. She Still Hates “Billions.”]
Transitioning the job of lead portfolio manager from one generation to the next means both of them working in tandem for an extended period, likely years. “Sharing portfolio management is not a particularly easy thing,” Crocker observed. Differences in “work ethics, risk management,” and innate style can derail the process, she added.
“In macro hedge funds, the portfolios take on almost the DNA of the manager,” she went on. “Sometimes sharing seems to be a good idea, but it isn’t.”