Inside the $20bn world of London's supertrader He is a legend in the

world of hedge funds but few in the City or Wall Street even know
what he looks like. Grant Ringshaw pulls back the curtain on the
very secretive but immensely rich life of Louis Bacon
Article from: The Sunday Telegraph London
Article date: November 18, 2001
Author: GRANT RINGSHAW

He is one of the world's most powerful investors. A hedge fund manager able to move financial
markets by unleashing lightning strikes in the free-wheeling currency markets, launch awesome raids
on stocks and shares or dump hundreds of millions of pounds worth of commodities at the press of a
button.

Louis Bacon is a legend in the world of hedge funds, where fund managers routinely take huge
leveraged bets and ruthlessly exploit weaknesses in the markets.

And unlike the world's other most powerful fund managers, Louis Bacon is based in London, in
Mayfair, which he finds the most convenient location to conduct his confidential affairs.

But outside this dark and secretive world few people know Bacon. Those who deal with him rarely
dare to comment to the media, painfully aware of the multi-billionaire's passion for secrecy.

As chairman and chief executive of Moore Capital Management, Bacon reigns over an investment
group with more than $9bn in funds under management; he then borrows on top of that to take trading
positions of $20bn and more.

Reputedly more powerful than George Soros, the legendary investor who famously pocketed $1bn by
betting against sterling in the 1992 currency crisis, Bacon, 45, is by far the biggest of the daredevil
managers who take big bets on the direction of stocks, bonds, currencies and commodities. As Bacon
once famously admitted, Moore Capital will deal in "anything that trades".

But for all his wealth and power Bacon maintains an astonishingly low profile. While Soros has used
his fame to lobby for political reform in Eastern Europe and pens books arguing global capitalism is in
crisis, Bacon has shunned the spotlight.

Moore Capital's London office, where Bacon spends much of his time, is an impressive building in
Curzon Street in Mayfair. But only the most eagle-eyed would notice the ultra discreet name plate by
the door. Moore Capital's website is nondescript in the extreme - unwanted users cannot progress
beyond a single page displaying the company logo.

Other hedge fund managers have been equally secretive. Nick Roditi, the Soros fund manager who
took home $125m in 1996 making him Britain's highest earner, trades from a tiny top-floor office in
Hampstead, North London.

Two weeks ago Bacon made a rare public appearance at an event for Shine, a charity set up in 1999 to
help educate disadvantaged children in London and the South East by Paul Tudor Jones, another
hedge fund legend and close friend. Chancellor Gordon Brown was among the guests.

Few people on Wall Street or in the City even know what Bacon looks like. Close friends include
Arpad "Arki" Busson, husband of supermodel Elle MacPherson, who runs investment funds from
offices in Geneva and is said to have raised Moore's funds when it was launched. Jodie Kidd, the polo-
playing supermodel, was said to be a recent guest at Bacon's estate in Long Island, New York.

If Bacon's identity is shrouded in mystery so is his trading. In recent years hedge fund performance
figures have appeared on the internet, but Bacon has resolutely tried to keep his results secret, even
attempting to stop publication of historic results. According to one story, in 1993 Bacon pleaded with
Forbes, the American business magazine, not to include Moore Capital's returns in a survey about the
excessive profits earned by hedge funds.

Unsurprisingly, Bacon and Moore Capital declined to comment for this article. Last year Bacon wrote
to investors: "We virtually never talk to the press because of our long-standing and firmly held belief
that we can best build value for our investors (and ourselves) if, to the extent possible, we `fly under
the radar' in our investment philosophy and trading activities."

So how did Bacon come to wield such power? He started his Wall Street career as a clerk on the New
York coffee, cocoa and sugar exchanges, but in 1983 moved to Shearson Lehman Hutton, the
investment bank, as a futures broker where he traded on behalf of some of the biggest hedge funds.

Within three years his reputation had soared allowing him to set up a small fund, Remington
Investment Strategies, even while he was working for Lehmans. Bacon scored an immediate success.
He correctly predicted the stockmarket crash in 1987, betting on futures contracts and making huge
short sales, the practice where traders sell securities they do not own in the hope of buying them back
at a lower price later and banking a profit.

In 1989 Moore Capital, named after his mother's maiden name, was set up with more than $100m,
while a further fund, Moore Global Investments, was raised. In the first year, Moore Global returned
86 per cent as Bacon bet correctly that the Japanese markets would collapse. By the end of 1990,
Bacon was running over $200m, with Busson an early supporter. Such performance has earned Bacon
astonishing sums. Hedge fund managers typically charge a 2 per cent annual fee, but the real killing is
made through an eye watering performance bonus of 20 per cent of the profits. Bacon personally is
thought to earn at least $100m in most years making him one of the top 20 earners on Wall Street.

He operates in the most high-powered area of money management as a macro investor. Macro
investing, made famous by George Soros and Tudor Jones, is viewed as a buccaneering style of
management depending on secrecy, market rumours and the ability to take huge bets, for its success.
At its core is a top-down view of global markets and economic trends which can be exploited and the
returns massively increased by gearing up the investment.

Bacon is believed to use a team of 15 managers, each a specialist making small trades. Each is quizzed
by Bacon who ruthlessly analyses the performance before making the big decisions. "He is like an
animal in his ability to sense the market," according to one hedge fund manager who has dealt with
Bacon.

In one of his few speeches, at a conference last year, Bacon attacked hedge fund managers for "the sin
of hubris, arrogance and pride". "Change is essential to survival . . . Money management is like a
game. There are no rules about the game except that it will change. But most importantly, you must
never become the game yourself. John Kenneth Galbraith once said: `There are those who don't know
- and those who don't know that they don't know.' I say, there are those who know they are in the
game; there are those who don't know they are in the game; and there are those who don't know they
are in the game and have become the game."

Bacon's investors are an elite group of fabulously wealthy private individuals, so exclusive that they
have to wait for the honour of an invitation to plough their millions into Bacon's funds and must also
sign up for a minimum of three years. For most of the past decade those investors have seen
astonishing returns. Bacon has been astoundingly consistent.

From 1995 to 1999 his annual returns ranged from 23 per cent to 32 per cent. Rivals such as Soros'
Quantum fund and the Jaguar Fund, run by another hedge fund giant Julian Robertson, veered
violently between big gains and losses.

Though Bacon is intensely private he is not a recluse. The multi- billionaire, who grew up in North
Carolina, is said to be charming, an authority on Ernest Hemingway and a serious sportsman who
loves to hunt, fish, snowmobile and free dive.
His former office in St James's Street in London is said to have included a purpose-built squash court
at half the standard width, allowing Bacon to practice his line shots. The Curzon Street office has a
gym fully fitted with trading screens. The company also counts an interior designer on its staff.

Bacon is said to crave order and routine. At a speech in London last year he turned up with an
entourage in a series of limousines and left at precisely 1.28pm so he could view the release of key US
unemployment data on the screen in his limo exactly two minutes later.

His trading skills have allowed him to live the life of the fabulously wealthy. Bacon has homes in the
Boltons, the exclusive Chelsea enclave where Madonna bought and sold a pounds 4m home last year,
Colorado, the Bahamas, and a 455-acre private island off Long Island bought for $11m seven years
ago.

His sense of order is said to exacting. According to legend the day before he moves to a new location
a member of staff will be despatched to ensure that an exact replica of what Bacon has been studying -
from documents to displays on computer screens - is ready when he arrives at his new desk.

But like many macro managers, Moore Capital appeared to come unstuck in 2000 after wrongly
predicting the strong US economy would lead to higher inflation as well as being burnt by technology
stocks. Overall the funds returned just 2 per cent.

That led some pundits to claim that macro funds were dead and buried. Robertson dramatically shut
down his giant Tiger Fund in March 2000, while Soros slashed the size and scope of his fund a month
later after alleged losses of $5bn on bad technology investments and bets on the euro. In contrast,
Bacon has sat tight. The death of the macro manager may well have been overplayed - this year many
have stormed back by exploiting the increasingly volatile markets. Just how well Moore Capital has
performed remains unclear. What is clear is that Bacon shows no signs of giving up and continues to
wield huge power.