Greg Coffey throws in the towel – a stark illustration that the “market” is always bigger than you

Greg Coffey

he hedge fund industry’s “poster boy”, Greg Coffey, who epitomised the “trading is all” approach, announced yesterday that he is quitting the industry for a “more balanced” life. He is to return to his native Australia.

Coffey joined Moore Capital in 2008 from GLG Partners as co-chief investment officer, bringing with him a 12-strong team. He famously turned down a $250m retention offer from GLG; when he left, his departure sparked large outflows from the firm and a sharp fall in its share price which still weighs on new owners Man Group. Then 38, he was estimated to have contributed about half of GLG’s total $679 performance fees in 2007, according to sources and is thought to have a personal fortune in excess of £100m – a nice retirement pot indeed!

He was originally intending to set up his own firm but a tough fundraising environment and a chance meeting with Bacon in the Curzon Street car park shared by the firms saw him resurface at Moore Capital in November of 2008. 

Coffey, who has been dubbed the Wizard of Oz, is a keen skier and has been known in the past to have a trunk of screens and keyboards sent ahead to wherever he and his family choose to ski. The hardware would be assembled to allow him to trade through the night while his wife and children slept. I certainly wouldn’t have wanted to be in his ski path after a few drinks the following day!!

Once thought of as a potential successor to Bacon at Moore Capital, Coffey took on the management of the Moore Emerging Markets Fund, which launched in August 2003. In March 2009, Coffey branched out with two new dedicated funds, one an emerging markets equities fund and the other focusing on emerging markets fixed income and currencies. Both funds have been lacklustre performers however since lanch and ast November, Moore Capital announced that Coffey was stepping down as manager of Moore’s emerging markets fund as a consequene of this. The fund was down just under 7% for the first 10 months of the year and assets under management had fallen from about $1.5bn at the start of 2011 to just “hundreds of millions,” investors said.

Coffey set up a new global macro fund, called the GC Macro fund, with almost $750m in capital from Moore. The idea was that he would take more concentrated bets with more risk and greater potential rewards than he was previously able to. Since it launched in November, performance has been flat, the source said.

A bit like John Paulson of the US, Coffey has found that a lot of trading is down to “time” and luck, ie being in the right asset class at the right time. His emerging market returns which were impressive relative to other global indices (his benchmark) delivered exceptional personal rewards at a time of crazy remuneration in the financial arena (2000 – 2007). The last few years have been very difficult for many fund managers with the entire hedge fund asset class this year underperforming the S&P 500 heavily. Coffey has succumbed to the law of reversion to the mean, but at least he has his health and wealth intact.