Posted on 10/10/2007 9:34:14 AM PDT by oblomov
The roller-coaster career of maverick trader Victor Niederhoffer took a sharp downturn after losses mounted and a key investor withdrew money from his firm, demonstrating how the market's recent volatility has shaken even some veterans.
Mr. Niederhoffer's hedge-fund firm, Manchester Trading LLC, ran into difficulties a decade after Mr. Niederhoffer lost most of his personal savings when his previous hedge fund collapsed. Last month, Mr. Niederhoffer's largest hedge fund, Matador Fund Ltd., was liquidated after suffering losses of more than 70%, according to people close to the matter. Adding to Mr. Niederhoffer's problems, according to a person close to the firm: Swiss-based Octane, a fund-of-funds firm that invests in hedge funds, pulled a significant amount of money from the firm.
Yesterday, Mr. Niederhoffer wouldn't comment. The move to close Matador was reported by the New Yorker.
An Octane spokeswoman wouldn't comment, citing the firm's policy.
In recent years, Mr. Niederhoffer, 63 years old, had staged something of a comeback, relying on a trading style that generally bets on rising markets and quick trades and is characterized by wild swings. Last year, for example, he saw the Matador Fund, based in Weston, Conn., lose 30% of its assets early in the year, but stage a rebound to finish with gains by year's end.
The turndown was sudden. As recently as Aug. 26, Mr. Niederhoffer, who earlier this year managed almost $300 million, said Matador was stable, despite traders' speculation that losses were heavy and investors were fleeing. "We have accomplished what we intended to do in connection with recent [withdrawal] requests and have an ample surplus in all respects," he said in an email at the time.
(Excerpt) Read more at online.wsj.com ...
He was George Soros' head trader at Quantum for some years before he started his own fund. Nicholas Taleb, author of _The Black Swan_, worked for Niederhoffer, leaving because of philosophical differences- Niederhoffer's strategy is to sell out-of-the-money options, which Taleb likens to picking up nickels in front of a steamroller. Niederhoffer's funds blew up in 1997 and again in 2002.
Could not read the whole article, but I’m familiar with Vic - played chess & tennis with him on occasion. He’s a brilliant guy - checkered investment history notwithstanding.
The Blow-Up Artist - Can Victor Niederhoffer survive another market crisis?
The last few paragraphs post-date his August blow-up...
Yes, I read that article yesterday. It was a great article. The writer was lucky (from a journalistic standpoint) to have been there as the fund was crashing.
Cassidy, the author, probably couldn’t believe his good luck (while feeling bad for Niederhoffer, of course)...
Though he is a bit arrogant and is somewhat affected in cultivating his “maverick” image, he seems like a brilliant and engaging, open person. For example, he hosts events and talks that are open to the public, and he will play in public checkers matches. His blog is like an interesting dinner party. He doesn’t seem to place much importance on titles or wealth when it comes to listening and learning from others. This is an excellent, rare quality, IMO.
And as far as blow-ups are concerned... Jesse Livermore made and lost several fortunes. I do not wish Livermore’s ultimate fate on Niederhoffer, however.
Niederhoffer seems to be through-and-through a daytrader, and his squash playing fits right in with that: what matters is each point as its played; there would seem to be very little strategy beyond the next few moments...
Has he asked for a Government Bailout?
Heh...I couldn’t imagine anything less likely. Neiderhoffer is an anarcho-capitalist.
As for his trading record - he's certainly no Livermore, but he did have a purple patch here and there. Perhaps his many talents and interests are liabilities to some degree in a single-minded-focus profession - something you couldn't say about Steve Cohen, for instance, or Marty Schwartz (art collecting notwithstanding).
I hope Victor once again makes a comeback. Unlike Jesse, he certainly has a lot to live for and prosper.
Like Milton Friedman said...every businessman is a Capitalist until it comes to his own business.
You might say that Niederhoffer is in the business of being a libertarian intellectual:
http://www.nycjunto.com/about.htm
Why do you know all of these big time traders?
Trading is a part of my past.
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