The line between “portfolio manager” and “trader” has blurred, and in 2011 that was a good thing.
Many current managers started their careers as traders, and in the past year — as both commodities and stocks showed stomach-churning volatility — the ability to get into and out of positions quickly has been crucial. Traders operate behind the scenes, but we found four who have the respect of their peers, including two who now run their own funds.
Mudrick Capital Management
Harvard Law grad Mudrick was previously at Contrarian Capital Management, where he traded distressed equities. He launched his own fund — small, it currently has $200 million under management — in 2009, and it’s done well so far. Mudrick bought a large stake in CIT CIT debt, which rallied from Chapter 11 and generated a 200% return for the fund. This year he traded into SuperMedia SPMD , an advertising company formerly called Idearc, which came out of bankruptcy in 2010 and made him a 50% return. Sources say Mudrick Capital is flat year-to-date, during a brutal year for most funds.
Saba Capital Management
Former Deutsche Bank trader Narayanan runs the London office for Boaz Weinstein’s $4.7 billion Saba Capital and focuses on trading European credit. “Since he joined, the firm has become much more active in the European markets,” says Weinstein. Narayanan’s insights (most recently, he established a highly profitable yield-curve trade in Italian banks) helped Saba outperform the industry. The fund is up 9% YTD.
DOWN, NOT OUT
Hutchin Hill Capital
The $2 billion fund is down 3%, mostly because of large equity positions. But its great returns from 2008 to 2010 were thanks in part to Ahmad, the fund’s exceptional credit trader, who in 2011 had to navigate the volatility in Europe. A source close to Hutchin Hill says Ahmad is “a trader I liken to [SAC’s] Steve Cohen in terms of talent. He’s fast and registers changes quickly. His P&L is hundreds of small wins.” Some of those wins this year were trades in credit and macro strategy.
Pia Capital Management
Commodities trader Pia used to manage $1.3 billion at Louis Bacon’s Moore Capital, but he launched his own fund and has maintained his focus on metals. Pia is bullish on gold, and in March he correctly predicted it would hit $1,900 an ounce by September. Pia Capital is down 14% this year because sector stock picks like Stillwater Mining SWC lagged, but this is its first down year. For 2012, Pia plans to scale back his equities trading and return to commodities.
UNDERSTATEMENT OF THE YEAR
Adoboli, who allegedly made unauthorized trades and faked documents at UBS UBS , called his actions “disastrous miscalculations.” Ya think? They cost the bank $2.5 billion, contributed to the ouster of CEO Oswald Gruebel, and put Adoboli on the list of rogue trader all-stars.
The best and worst of Wall Street 2011
- Venture capital and private equity
- Hedge funds
- Mutual funds
This article is from the December 26, 2011 issue of Fortune.