A hedge fund trader who once handled George Soros’s European investments has been hired back to oversee the $25 billion fund that is now the main vehicle for the Soros family, foundation and friends.
Scott Bessent, 49, succeeds Keith Anderson, who left in July after his performance managing the giant fund lagged industry peers, according a profile published online by Bloomberg.
Bessent, who managed Soros’s European investments for eight years, was reportedly mentored not only by Soros but also by former Soros traders Nicholas Roditi and Stanley Druckenmiller, a chief strategist who produced 30 percent annualized returns for 12 years.
Soros Fund management was listed as the world’s seventh-largest hedge fund as recently as April, 2011, based on data from Bloomberg. As the new CIO of the $25 billion fund, Bessent will oversee asset allocation, sizing up the biggest trades, managing internal teams, due diligence and selection of outside managers, risk management, hedging and tactical investments.
Soros’s flagship Quantum Endowment Fund returned about 20 percent a year, on average, since 1969. But its performance has lagged in the last 18 months, losing roughly 5 percent in the first half of 2011, after a gain of just 2.5 percent in 2010. Other macro funds returned an average of 5.6 percent in the same year-and-a-half period, according to data from Hedge Fund Research Inc.
As for Bessent’s background, he graduated from Yale University in 1984 and originally wanted to be a journalist. He ended up working at Brown Brothers Harriman & Co in New York, then a Saudi Arabian-based holding company, and then for Kynikos Associates Ltd., a short-only fund run by Jim Chanos in New York. Soros Fund Management was a big client of Kynikos at the time.
According to an interview published in Steven Drobny’s book, “Inside the House of Money,” Bessent ran out of stocks he wanted to short. So he joined Soros Fund Management as an analyst right around the time Soros’s European portfolio was in turmoil.
Within two weeks, Soros had fired the entire European team, leaving Bessent to manage a $300 million portfolio. By the time he left eight years later, the portfolio had grown to $1.5 billion, with annualized returns of 26.5 percent.
Do you think Bessent can turn around the trading fortunes of Soros’s macro funds in this tumultuous environment? Add your comments below.