George Soros' protégé just nailed one of the biggest hedge fund launches ever

George sorosAP ImagesGeorge Soros

Scott Bessent, who had been managing George Soros’ $30 billion fortune for the past four years, officially launched his own hedge fund this week with $2 billion in assets, Bloomberg News reports.

Bessent’s Key Square Group, a global macro hedge fund, will be running $4.5 billion by the end of the first quarter, making it the third-largest hedge fund launch ever, the report said.

It’s definitely the most high-profile launch of 2016.

To put it in perspective, the largest hedge fund launch ever was Convexity Capital in 2006, which had more than $6 billion in capital.

Bessent, 53, is well-known in the global macro investing world. He’s also widely considered a protégé of Soros.

In 2011, he rejoined Soros Fund Management — a family office hedge fund — as its chief investment officer. Earlier in his career, he had run Soros’ European investments for eight years before setting out on his own.

‘It’s just like journalism’

Bessent attended Yale and graduated with honours in 1984. He would later return to his alma mater as an adjunct professor teaching a class called Hedge Funds: History, Theory and Practice.

As a student, Bessent was a liberal arts major who had planned on pursuing a career in journalism. He really wanted to be the editor of the Yale Daily News, but didn’t get the position. He ended up taking an internship for the famed money manager Jim Rogers.

“I like this. It’s just like journalism — you gather a lot of information and make a decision, but instead of writing a story with an angle, you make an investment with an angle,” Bessent told Steven Drobny in his book “Inside The House of Money.”

After graduation, Bessent went to work for Brown Brothers in equity research for about six months. He told Drobny that he hated it. He then went on to help manage the money of a wealthy Middle Eastern family.

After working for the Middle Eastern family, Bessent joined short-seller Jim Chanos’ hedge fund Kynikos Associates. In 1991, Bessent made the move to Soros Fund Management.

Bessent worked at Soros Fund Management from 1991 until 2000. By the age of 29, Bessent was running Soros’ European fund.

Going solo

In 2000, the then-37-year-old left Soros and decided to go solo and start his own hedge fund called Bessent Capital based in London and New York.

“George is going to be 70 in August and I think his parameters have changed. I am a young guy. If I were 20 years older, I would probably have the same attitude that he has and would be happy with double-digit returns. However, over the past nine years I have had a compound annual return of 30 [per cent] in Europe on a capital base of $1 billion to $2 billion and I hope to be able to replicate that,” he said at the time.

CityMagnusL3D via Compfight ccThe London skyline

Bessent was quickly able to raise $1 billion for the fund.

He ended up losing more than 10% in his European stock fund in the first half of 2001, according to Bloomberg. His investors started to pull out, so he decided to move back into macro investing. He ended up returning outside money and transitioning to a family office format in 2005.

In 2007, he was appointed as director of research and strategy at Protégé Partners, a New York-based fund of funds.

He had been in the middle of forming Key Square Group, the macro fund, when he was recruited by Soros Fund Management in September 2011.

And now he’s finally launched.

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