Macro hedge fund Caxton has been around a long time. Founded in 1983 by U.S. investor Bruce Kovner, it's one of the granddaddies of the hedge fund world. But for all Caxton's long history, 2020 will stand out as something special.
The fund just published results for its UK entities - Caxton Europe LLP (the partnership) and Caxton Europe Asset Management Ltd. Both confirm that 2020 was a standout year.
Turnover at the two entities went from £20m in 2019 to £275m in 2020. In the process, Caxton's European operations went from a £10m loss in 2019 to a £217m profit last year. That profit was distributed among its nine partners, who included portfolio manager Jim McKeever (once a trader at UBS), chief risk officer Matt Wade, portfolio manager Arjuna Gamage, portfolio manager Christian Deazely and senior portfolio manager Anil Kamath. The other partners were corporate entities. Two partners - Iomar Barrett and Stathis Metsovitis - retired at the end of the year.
Unlike Balyasny, which ascribed its own excellent year in 2020 to "positive performance from the portfolio management team," Caxton didn't explain why last year was quite so good. It seems reasonable to presume, however, that it had something to do with the enormous asset purchase programs implemented by central banks globally in March 2020, which helped turn what was becoming a very, very bad year for macro hedge funds into the best year ever.
Caxton's windfall is all the more notable given that the fund's European business was struggling only a few years ago. In 2018 revenues at Caxton Europe Asset Management were just £12m and the fund cut headcount and pay.
Last year, 2018 was just a vague memory. Caxton Europe Asset Management Ltd hired nine people in 2020, taking its total headcount to 75. It paid them each an average of £612k ($827k) a head, up from £327k in 2019. 2020 was all the more impressive when you consider that in 2018, Caxton's 52 London staff were paid an average of £199k each.
It's likely that Caxton's London staff weren't the only beneficiaries of 2020. The Financial Times reported in December that the fund - which is based in London but also has offices in New York, Princeton and Singapore - gained 40% on its main fund last year and 55% on a smaller macro fund.
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