Greg Coffey: is hedge fund management incompatible with fatherhood, ageing?
Maybe it was the third child that did it? Maybe it was the fourth to come? In 2011, Bloomberg reported that Greg Coffey had two children. Now he’s got three. The family is said to be, ‘growing’, implying another child may be on the way.
However prodigiously he’s parented, 41 year old Coffey has had enough. Having made an alleged $420m working in hedge funds since leaving Macquarie in 1993, he’s off to do something less exacting instead.
'The demands of my growing family mean that I am unable to commit to the market with the same intensity going forward,” declared Coffey in his valedictory letter to his investors this week. “I plan on seeing much more of my wife and children and spending time in my home country, Australia.”
Was Coffey’s hand forced by his wife, Ania Brzezinski, a former analyst at Credit Suisse whom he met at university in Australia? Maybe. He was, after all, renowned for working 20 hour days, even when on family holidays. Brzezinski’s tolerance may have worn thin: she seems to have attempted to rein in his working hours three years ago after their first child was born, allegedly compelling Coffey to conduct whispered conversations with colleagues in his car whilst driving the baby around to encourage sleep.
Is Coffey a warning, then, that hedge fund trading – like creativity – doesn’t mix well with prams in the hall and nappy bags in the Brabantia?
Yes. And no. There are plenty of older traders with wives and children. Crispin Odey has 3 and is now aged 53. Trading and family life are not antithetical in all cases.
Very active trading may be a problem though. In May 2008, Coffey was said to have turned over his $5bn portfolio over an average of 2.8 times a day. That kind of churn implies 20/24 hour dedication, separate sleeping arrangements and burnout.
“There are some hedge fund strategies that require far more active management than others,” says Nicola Ralston, a director at Pirho Investment Consulting. “The most obvious strategies with inherently high turnover are strat arb funds or CTAs (commodity trade advisors).
“With global macro you have choice on whether to take a long or short term view,” Ralston adds. “Some global macro managers will trade infrequently, but it’s often very difficult for a trader who’s taken a very active short term view to change their approach and go long.”
As an emerging markets focused “very active” global macro manager, Coffey would have been compelled to work across multiple time zones and trade everywhere from Asia to Latin America and emerging Europe. He would also have been compelled to live in London or somewhere near in order to straddle each zone and share any waking hours with his spouse.
“People who are very active traders don’t tend to do it for very long,” says Ralston. “They do tend to get burnt out. No matter how much money you’re making you can’t be awake all the time and the markets are trading not far short of 24 hours a day.”
The obvious way to dodge burnout is to work with a team. Coffey seems to have had one of these – he took 12 people with him to Moore Capital. It’s not clear whether they mitigated his enthusiasm for working nights, however.
Family life and the danger of burning out probably weren’t the only issues in Coffey’s case: there was also performance. His hadn’t been great. Bloomberg says assets under management at Coffey’s fund had fallen from $1.6bn to $100m and that what remained was allegedly down 10% in the 8 months to August 2012. Moore has been making redundancies this year. The pressure was on.
“The real issue is simply that if your performance is not going that well and you have already made a lot of money, it may be tempting to throw in the towel,” says one hedge fund manager.
Peter Evans, a coach specialized in working with fund managers says it’s actually quite unusual for hedge fund traders to burn out. “They key to being a successful trader is self-awareness,” he says. “Most people realize that if they’re stressed it’s not the optimum state of mind to be in.”
Maybe Coffey was simply self aware enough to know when to walk away and do something else instead.