Christopher Rokos, who used to be the fair-haired boy of the Brevan Howard hedge fund, managing a cool $37 billion, is now looking at a five-year, non-compete clause that forbids him going out on his own. So he’s not happy.
But there’s unhappy and there’s delusional, and Rokos, according to the Financial Times, has crossed over to the latter, when he told a Jersey court that not letting him trade for five years would be “contrary to the public interest.”
Rokos’ attorney argued in documents filed that the five-year ban means the public will be deprived of his “skills and hard work for period in excess of five years.”
Can we make it without him?
Rokos’ moneymaking ability, according to the FT, are “staggering.” He left Brevan Howard in 2012 after earning in the neighborhood of $900 million in his ten years there. Before that, he was behind Credit Suisse’s proprietary trading division in London becoming one of the world’s most successful hedge funds.
Alan Howard, co-founder of Brevan Howard and the hedge fund’s leading force, is not in good shape at this point. If the fund’s performance doesn’t improve by the December, Howard would be stuck with a losing year, for the first time in his career.
Howard himself admitted to investors in a year-end letter that his performance at the helm has been “somewhat disappointing.” So that for Rokos to start doing moneymaking dances at this stage of the game should be a source of worry to Howard.
Alan Howard was born in England to a Jewish family, and graduated from Imperial College London with a Master of Science. He began his financial career at Salomon Brothers and worked in the ECU eurobond market.
In February 2013, Forbes listed Howard as one of the 40 Highest-Earning hedge fund managers. In 2014, he was 53rd on the Sunday Times Rich List.
Brevan Howard has been telling anyone who cares to listen that not having Rokos around since 2012 has not influenced the fund’s performance negatively. But some investors have been quitly longing for what they called Rokos “less rigid structure” than what’s being practiced nowadays at Brevan Howard.
The hedge fund is well known for the way it controls risk, meaning that people who lose money are frequently fired. While traders are richly rewarded, earning bonuses of between 11 and 17 per cent of their gains, they will also quickly see the amount of capital they trade with slashed if they post even a relatively small loss.
Howard, according to a former employee cited by the FT, “hears everything. He’s very observant. He sits right in the middle of the trading floor, constantly listening to flow and how people are behaving. He looks at you as your P&L (that’s Profit and Loss to you and me).”
Since leaving Brevan Howard, Rokos has been trading his own money, his way, and quietly built up his resources, managing more capital than “all but the largest of start-up hedge funds.”
And he also hired away a few Brevan former employees.
So the old gang’s all there, in London (Howard’s in Geneva), but they can’t play in the big league, on account of the non-compete clause.
So now you know why Rokos is so, and also why he’s so ready to do some damage. But, seriously, does keeping him benched another three years amounts to depriving the public?
We think the public will manage, somehow.