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Banking & Finance

Trader famed for shorting Japan's economy shuts fund to clients

Louis Bacon's macro hedge fund Moore struggled after financial crisis

Macro trader Louis Bacon, who famously cashed in on Japan's market collapse during the 1990s, is closing his hedge fund Moore Capital to outside investors.   © Getty Images

NEW YORK -- Legendary trader Louis Bacon, who rose to prominence by anticipating Japan's market crash some three decades ago, is closing his hedge fund Moore Capital Management to external investors.

The New York-based billionaire told investors on Wednesday his firm will return client money and transition into a single fund that manages only assets of its principals, according to a letter seen by the Nikkei Asian Review.

"Disappointing results of these funds of the last few years obviously inform this decision," the letter said. "But our long term record is one we remain proud of, having delivered a net annualized return of 17.6% and a cumulative return of over 21,000%."

Bacon, known for trading on a global macro strategy much like retired hedge funders George Soros, Julian Robertson and Bruce Kovner, launched the predecessor of Moore Capital in 1989.

The fund produced a blockbuster 86% return in its first full year, after Bacon shorted the Nikkei index just prior to Japan's bubble burst. The same year, he also took long positions on oil in anticipation of Iraq's invasion of Kuwait.

In general, the decade since the financial crisis has been markedly more difficult for Bacon and his fund, amid the dominance of low interest rates and low volatility -- market conditions deemed unfavorable to those trading macro.

But economic policies of Japanese Prime Minister Shinzo Abe, whose current tenure started in 2012, gave a momentary boost to global macro hedge funds, many of which went long on the country's stocks and short on its currency, a practice dubbed the "Abe trade."

Bacon made big gains in late 2012 and 2013 from the Japanese market's bull run and the fall of the yen, as did other macro titans including Soros and Paul Tudor Jones, but was soon hurt by a reversal of the trend.

Having once handled as much as $15 billion, Moore Capital's assets under management totaled $8.9 billion at the end of last year. Its 2019 returns are in the low single digits, far underperforming the S&P 500, which is up over 20% year-to-date.

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