Soros Ends His Run Investing Other People’s Money
Bloomberg announces that George Soros is closing his $25 billion hedge fun to outside investors–though there’s only about $1 billion in outside money to return. The firm will now solely manage the Soros family’s money. Even though Soros’s Quantum fund has posted an average of 20% returns since 1969 under Soros, Druckenmiller and others. The firm only made 2.5% last year and is 6% in the hole so far in 2011. Those numbers and the firm’s widely reported 75% cash position mark the evolution of the fund from swashbuckling speculator to safe harbor investor:
Soros, who turns 81 next month, will hand back the money, less than $1 billion, by the end of the year, according to two people briefed on the matter. His firm will focus on managing assets solely for Soros and his family, according to a letter to investors. Keith Anderson, 51, chief investment officer since February 2008, is leaving, said the letter, signed by Soros’s sons Jonathan and Robert, who are co-deputy chairmen. [...]
Soros’s sons said they took the decision because new financial regulations would have made it necessary for the firm to register with the Securities and Exchange Commission by March 2012 if it continued to manage money for outsiders. Because the firm has overseen mostly family assets since 2000, when outside money accounted for about $4 billion, they decided it made more sense to run it as a family office, according to the letter.
Source:
Soros to End Hedge-Fund Career, Return Money to Investors
by Katherine Burton
July 26, 2011; Bloomberg
http://www.bloomberg.com/news/2011-07-26/soros-to-end-four-decades-as-hedge-fund-leader-by-returning-investor-cash.html
Tweet
Facebook
Reddit
Digg this!
July 26th, 2011 at 9:42 am
when I heard about this this am .. 1/25th is returning to inwestors .. hum .. if the 24/25ths is real (& this post) I see 20% (is a good return) on investment .. but 24/25ths management fee ?
July 26th, 2011 at 9:48 am
If hedge funds are such a great deal for investors, then how does Soros end up with 25B and his investors with a fraction of it.
Why on earth bother dealing with that 1B when you’ve got 25 unless you”re ripping those pigeons off?
July 26th, 2011 at 10:46 am
“Soros’s Quantum fund has posted an average of 20% returns since 1969 under Soros”.
Okay, rip me off, I’d be so bummed out…..
July 26th, 2011 at 12:01 pm
At this point, I suspect that the 1B is money from people with whom he has a personal relationship and who want to piggyback on his personal performance, which is why it is only 4% of the fund. The change in regulations just means that it no longer makes sense for him to do that, since it requires additional disclosures.
I’m not sure why this is a huge newsworthy event. I find it more “interesting” than anything else. The “implications of regulation” is probably the most important takeaway, although it’s also interesting how Macro funds (in particular, Soros’) have been struggling in an environment that is so dominated by macro factors. I think it is because so much of the macro environment is not so much macro-economic, but macro-political (with economic consequences). If you’re not actually in the negotiation room, it’s very difficult to get a sensible read on how things are likely to play out. Even if you’re in the room, it’s pretty difficult.
July 26th, 2011 at 12:39 pm
[...] George Soros is returning money to outside investors. (Bloomberg, Big Picture) [...]
July 26th, 2011 at 12:58 pm
Agree with Bruman about this being more “interesting” than actually informational. Still, it says a lot about the regulatory environment that we live in now. And, make no mistake, most of the regulations are necessary, and still more are probably needed, because us folks in finance will find a way to rip off the widowed and the blind if we can.
Not really. Too many regulations, but spawned from too many crooks. 1 crook is too many.
July 26th, 2011 at 1:59 pm
There is also the “whale factor” – a fund/firm, like say Berkshire Hathaway, when it gets too large cannot find whales in the investing ocean that can generate larger returns.