When Phil Duff, Gil Caffray and Paul Ghaffari launched
FrontPoint Partners in November 2000, they hoped to create a
hedge fund firm so diversified it would be impervious to a
single manager's blowup and so well-managed it could track
every trade for undue risk. The trio had witnessed dizzying
falls at their former elite firms-Tiger Management and Soros
Fund Management-and fashioned an institutional
investor-friendly platform they thought could manage $25
billion or more using dozens of teams. To do so, the men
designed a compensation scheme to encourage collaboration and
tamp down egos.
||Portfolio manager Joseph "Chip" Skowron
Illustration by Andrea Ventura
It didn't work out that way.
Almost from the beginning, internal battles were legend.
Managers screamed to keep more of their profits after one big
year, while management tried to keep a larger stake for the
firm. Duff had long wanted...