Are these the only portfolio managers doing well during a brutal month for macro?
It's been a brutal few weeks for macro hedge fund managers of the world. Bloomberg reported last Friday that after losing money in mid-September following the Federal Reserve's first rate increase since 2023, macro funds lost money again last week after carry trades relating to French bonds blew up.
There is blood on the carpet. Some of the best known portfolio managers at some of the biggest funds are thought to be nursing large losses. None of the funds concerned have confirmed this. Only the unfortunate macro-focused Taula Capital Management is known to have been down 9.4% in September.
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Even Taula, though, is understood to have portfolio managers who are doing well. There are unconfirmed suggestions that Lewis Morton, the former star portfolio manager at Eisler Capital, is up nearly $20m this year and that Josh Blakely, who came from Millennium, is also doing fine.
Similarly, it's suggested that James Watson, formerly of Millennium is personally doing well at Balyasny Asset Management, even though Bloomberg said BAM lost money on the French trade. Ex-Goldman Sachs managing director and rates trader Andrew Bound is said to be up at Citadel. This is unconfirmed by either the individuals or the firms concerned, though.
More broadly, it's thought that many macro teams are nursing large losses that they are unlikely to recover from this year. This is problematic because such portfolio managers become "zombies." Losses are typically carried forward to the next year and must be recovered before bonuses are paid. At firms like Millennium, salaries may also be treated as an advance against future profits.
This is why a period of deep losses is often followed by a rush to join new funds with a clean slate. Excepting the names above, we could therefore be in for a period of high PM liquidity in London.
Or not. The head of one pod said many people are getting tapped on the shoulder. "But the problem with a year like this is that with lots of PMs down, you fire one and hire another guy who lost money as well."
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