Earlier this month, a story splashed across the front page of the Post warned that representatives from more than a dozen New York City hedge funds had "crossed the border" to meet with Connecticut Governor Jodi Rell. Over fried calamari, the governor reportedly pitched the executives on moving their businesses to her state: There had been talk for months that the city's hedge fund managers might flee because of cruel new taxes, just like the threats about a mass exodus from London to Switzerland, or from Europe to Hong Kong.
Instead, the real threat to the hedge fund world has turned out to be the ineffable, sweet, cozy lure of hammocks.
This month, Richard Grubman, the top Boston hedge fund manager, who was in the papers earlier this year for allegedly throwing his keys in the face of a valet who had asked him to move his BMW X5 at the Ritz in Boston, announced his retirement from the $10 billion Highfields Capital. Then, last week, the 57-year-old Soros protégé Stanley Druckenmiller announced he was shutting his hedge fund, writing a widely circulated letter that described the stress of recent struggles. He reportedly had his retirement epiphany after turning down a nice October golf invitation from another billionaire.
"Investors want to meet with them to find out why they're not making money, and they're like, 'I don't want to meet with these assholes.'" - a hedge fund manager
Two days later, Paolo Pellegrini, who only recently left John Paulson to start his own fund, announced that he'd be returning money to investors after a terrible year. "I've concluded that substantial additional work," he said, "is required to position the Fund to profit consistently." Earlier in the summer, Steven A. Cohen, No. 113 on this year's Forbes billionaires list, and often associated with the Damien Hirst formaldehyde-suspended shark he owns, told Vanity Fair he was about ready to step down from full-time trading.
Is this wave of hedge fund retirement what happens after too many chaotic years in a row, or is it a symptom of the changing times on Wall Street, where there are slightly new rules getting in the way? Or, like Julian Robertson's iconic announcement just as the dot-com bubble was bursting, is it a sign of dark days ahead?
"THERE ARE A couple of ways people quit," a person who manages a multibillion-dollar hedge fund said this week. "One is, they make a ton of money, they have a crappy year, now investors want to meet with them to find out why they're not making money, and they're like, 'I don't want to meet with these assholes.'"
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