Hedge-fund mogul Paul Tudor Jones and his chief stock-picker, James Pallotta at Tudor Investment Corp, are parting ways now that Pallotta’s performance is sucking wind.
WSJ: In recent months, Mr. Pallotta has privately expressed frustration about picking stocks in such volatile markets. Compounding matters, he has said, was the fact that nervous investors could pull their money every quarter, according to people familiar with his thinking.
Withdrawals can force hedge-fund managers to unwind positions at inopportune times, often causing steeper losses and still more withdrawals.
Mr. Jones, meanwhile, has talked privately in recent weeks about the possibility of restructuring his Greenwich, Conn., firm in a way that could result in a separation with Mr. Pallotta, according to people familiar with the discussions.
Mr. Pallotta, 50 years old, is based in Boston, where he is part owner of the Celtics basketball team. His responsibilities include U.S. stock investments in Tudor’s $11 billion BVI Global Fund, its biggest, which wagers on everything from bonds and equities to commodities and currencies.
Raptor peaked at about $9 billion in assets last year but has shrunk to about $5 billion as bets soured and investors pulled money. Hurt by bets on energy stocks, Raptor has lost about 8% year-to-date, after losing about the same amount of ground during 2007.
Prior to 2007, Mr. Pallotta’s stock-picking consistently helped Tudor post some of the best returns in the industry and made billions of dollars for investors. Before its troubles started last year, Raptor delivered about 19% annual returns, on average. During the same period, BVI gained about 24% a year, on average, since 1986. Losses from stock bets were a drag on BVI’s performance during 2007.
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