The $10 billion global macro fund Caxton Associates entered a partnership with Wadhwani Asset Management recently, according to the Financial Times.The FT likens the deal to last year’s move by Brevan Howard to partner with the quant fund London Diversified Management. The quant fund offered, among other things, diversification and technology that Brevan Howard wanted access to.
For Caxton, which was up about 5% through September last year, the deal brings a new star economist who will now manage a “significant” portion of Caxton’s portfolio, Sushil Wadhwani.
According to the Financial Times:
Wadhwani Asset Management, set up by former Bank of England monetary policy committee member and London School of Economics lecturer Sushil Wadhwani, is to enter a strategic partnership with Caxton…WAM will manage a new account to oversee a “significant” allocation from Caxton’s flagship $7bn portfolio. Mr Wadhwani’s firm will relocate to Caxton’s London office.
The main question now is, what will Wadhwani’s involvement mean for Caxton’s current economist, John Makin? He warned about deflation in June, thinking that ultimately was the nail in the coffin that destroyed Peter Thiel’s Clarium. In August, he said delfation is already here. Obviously, that was proven incorrect. For many other reasons, too, hiring Wadhwani is an exciting, promising move for Caxton.
- Former Tudor Corp partner
- Director of Equity Strategy at Goldman Sachs
- A member of the Bank of England’s Monetary Policy Committee from June 1999 to May 2002. (The MPC is responsible for setting UK interest rates.)
- In 2008, his fund was up 30%, according to the Telegraph. And he’s returned 12-13% over the past 5 years, he says.
- He has a Ph.D. in Economics from the London School of Economics
- Made a Commander of the British Empire in the Queen’s Birthday Honours List in 2002
- Written many research papers, including some on unemployment and inflation.
Here are some of his thoughts about investing:
“Human nature gives too much weight to recent events, and often clings to beliefs in the face of contrary evidence.”
“Our current economic and market outlook suggests macro uncertainty, which can create a ‘herding’ effect among investors.”
So you could see why an all-star like Wadhwani could stir things up at Caxton. Wadhwani is reportedly friendly with Caxton’s CIO, Andrew Law.