Looking back on Balestra’s doomsday view and the launch of Taylor Woods

October 18, 2011   Rob Copeland


AR also revisits John Henry & Co. in the heyday of the Boston Red Sox.

One year ago

»» George "Beau" Taylor, the global head of commodities arbitrage at Credit Suisse, prepared to launch his own diversified commodity macro hedge fund. Taylor partnered with Trevor Woods, head of energy arbitrage at Credit Suisse, as well as six other Credit Suisse émigrés.

Their new venture, Taylor Woods Capital Management, was seeded with $150 million as part of the $1.8 billion Blackstone Strategic Alliance II fund. Since then, Taylor Woods has shot past $1 billion, according to a person familiar with the firm. The portfolio, which has a 50% focus on energy with the remainder scattered among various macro themes, is flat for the year through September, the person said. That compares with a 5.42% gain for the AR Commodities Index and a 2.02% return for the AR Macro Index during the same period.

Before joining Credit Suisse, Taylor was global head of energy sales and trading at JPMorgan, and before that he was co-head of power trading at Morgan Stanley. Woods ran power and gas trading at JPMorgan and was previously a coal, emissions and power trader at Morgan Stanley. 

The Greenwich, Conn., firm did not respond to a request for comment.

»» Jim Melcher's bearish views cost Balestra Capital Management a chance to ride a rising market, as his $1.5 billion global macro fund was down 4.74% through September of 2010 compared with a 4.59% gain for the AR Macro Index.

The fund bled out without many upticks through the first half of this year before its pessimism paid off, resulting in an 8.71% gain in August, when nearly three-quarters of funds lost money. Balestra fell 0.20% in September and is now up 2.96% for the year.

"The extraordinary weakness of economic and political management in both the U.S. and Europe is in itself increasingly dangerous," partner and co-portfolio manager Matthew Luckett told investors in a July letter. "It is important to recognize that the central bankers have for the most part run out of options to stimulate growth or prevent a slide back into global recession."

Five years ago

»» John W. Henry & Co. tried to buck a losing streak with successful bets on energy, but failed to generate returns with a currency play. Its GlobalAnalytics managed futures program posted brief monthly gains in the late summer and early fall of 2006, while its Dollar program and Currency Strategy Allocation program lagged behind.

The latter two funds have since been liquidated, along with the vast majority of what was once $3.5 billion in assets under management at the Boca Raton, Fla., firm. As of August this year, JWH ran $301 million and had made a fresh push to raise funds from institutional investors with a new head of business development, Michael Elias.

Global Analytics, which manages $128 million, remains JWH's flagship fund. Its 4.68% year-to-date return compares with a 0.41% slip for the AR Managed Futures Index. That's still much better than the on-the-field performance of Henry's Boston Red Sox, which infamously blew a nine game lead in the last month of the season this year and failed to make the playoffs.

»» Jack Meyer's Convexity Capital Management won Hedge Fund Manager of the Year and the Blackstone Group won Private Equity Manager of the Year at an awards ceremony hosted by Alternative Investment News (a publication that was rolled into AR in 2010). Among the other winners were Acadian Asset Management, State Street Global Advisors and Cohen & Steers Capital Management.

At this year's AR Awards, to be held Nov. 10 at the Mandarin Oriental in New York City, nominees for top prizes include BlackRock, Bridgewater Associates and York Capital Management.

See also:

Bridgewater, Paulson take top honors at 2010 AR Awards
Paulson, SAC among winners at 2009 AR Awards
Paulson & Co. takes three awards at 2008 AR Awards

 



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