Are you really only as good as your last trade? Stars 'n Bubbles - What's Next? (The Economist)

Celebrity hedge-fund managers

Kapow!

It’s not an easy time to be a star

Jun 23rd 2011 | NEW YORK | from the print edition

Masters of the universe no more

THE superheroes of finance seem to have lost some of their powers. Several of the hedge-fund industry’s most exalted names are beset by problems more associated with mere mortals. Take John Paulson of Paulson & Co, a $37 billion hedge fund. He became famous after he bet against the housing bubble but is now in the limelight for less flattering reasons. Mr Paulson was the largest shareholder in Sino-Forest, a Chinese forest-plantation operator accused of fraud by short-sellers earlier this month. Its share price plummeted and Mr Paulson sold his stake, dealing his fund a reputational blow and around $500m in losses. His flagship fund is down 20% so far this year.

Hedgies’ woes are not just financial. Ikos, a big European quantitative hedge fund, has been shaken by domestic melodrama. Its two founders, Elena Ambrosiadou and Martin Coward, are going through an acrimonious divorce. Recently a colleague of Mr Coward accused Ms Ambrosiadou, who continues to run the firm, of spying on him and even using an undercover agent. Ikos fired back that investigations were needed to protect the firm’s proprietary technology, which it accuses Mr Coward and his “acolytes” of trying to “misappropriate”.

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