(Bloomberg) -- Asking clients to take their billions away has worked wonders for Michael Platt.
Free to take bigger and bolder bets, Platt has guided his private investment firm BlueCrest Capital Management to blockbuster gains year-after-year. Returns soared to 95% in a tumultuous 2020 when a global pandemic roiled markets, according to a person with knowledge of the matter. His personal wealth has doubled in the past year to about $10 billion, according to Bloomberg estimates.
“The holy trinity has come together for him,” said Saleem Siddiqi, founder of Musst Investments, which provides capital to hedge funds. “Low volatility, cheap leverage and momentum and directional markets worked for many traders in 2020.”
BlueCrest has also been one of the biggest beneficiaries of a long-running trend that has seen hedge fund titans shut investors out after making billions by risking clients money. Some have given up trading for personal reasons, while others have blamed tighter risk controls that come with managing external money.
Last year’s results represent BlueCrest’s biggest gain since Platt said he would return about $7 billion in clients’ money five years ago to focus on trading for himself and for his partners. Not much is known about the firm’s trading strategy since then, but it has given Platt, 52, the broad freedom to take riskier and highly leveraged bets to juice up returns.
Client Settlement
BlueCrest’s returns are net of all expenses, the person said, asking not to be identified because the information is private. Hedge funds on average made 9.5% last year. A BlueCrest representative didn’t return a call seeking comment.
The gains came in a year when BlueCrest agreed to pay $170 million to former clients to settle a U.S. regulator’s allegations that it effectively placed its own profits ahead of its customers.
Last year also saw BlueCrest pull back from a complex debt-trading strategy that led to losses and made the firm cut risk by about $1 billion in the early days of the pandemic.
Read more: Clients Got B-Team Traders. BlueCrest Kept Best for Itself
Two years before deciding to return clients’ money, Platt told investors that he wanted to increase BlueCrest’s assets to $50 billion. That never happened. Poor returns and an internal fund that sparked controversy led to a drop in assets. At the end of 2015, the Jersey-based firm decided to return client money.
Last year’s performance follows a gain of about 50% in 2019, and annual returns of 25%, 54% and 50% in the three years before that, respectively. His wealth, which was estimated by the Bloomberg Billionaire Index at $1.25 billion in early 2016, has since soared.
Exclusive Company
The latest lift makes Platt one of the richest money managers in the world, according to the Bloomberg index, a group that includes Renaissance Technologies founder Jim Simons at $23 billion and Citadel’s Ken Griffin with $21.5 billion. Ray Dalio’s wealth is estimated at $15.5 billion, with David Tepper at $12.9 billion and Steven Cohen at $10.2 billion. Some of the totals don’t reflect gains from 2020.
Platt joins peers such as Rob Citrone’s Discovery Capital Management, Andrew Law’s Caxton Associates and Chris Rokos’s investment firm in posting some of the best results ever in a banner year for funds that bet across asset classes.
Platt broke into the hedge fund industry in 2000, founding BlueCrest along with fellow trader William Reeves. Platt earlier spent almost a decade at JPMorgan Chase & Co., where he started out trading interest-rate swaps on the derivatives desk and rose to become a managing director of proprietary trading.
He built BlueCrest into one of Europe’s three largest hedge funds, overseeing more than $37 billion at its peak. The firm produced more than $22 billion in trading profits for investors in the 15 years it handled client money.
(Adds pullback from debt strategy in 8th paragraph)