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...