April 10, 2012

When Goldman Sachs began winding down its proprietary trading operation with the Volcker Rule on the horizon, its star traders Pierre-Henri Flamand and Morgan Sze left the firm to start hedge funds.

Their departures generated a fair share of attention from the media, and investors reportedly couldn't deliver their money to the upstart hedge funds fast enough. Bloomberg Businessweek reported that both hedge funds managed to raise about $1 billion as they got off the ground, with both charging the standard fees of around 2 percent of assets and 20 percent of profits.

But to date both hedge funds have stumbled out of the gate and are now looking to stem their losses, the magazine notes. And it turns out their ex-colleagues who forged the same path are fairing no better.

From Bloomberg Businessweek:

Sze's Azentus lost about 4.8 percent from its April 2011 inception through February, says a person with knowledge of its returns who declined to be identified because the figures are private. Roger Denby-Jones, Azentus's chief operating officer, declined to comment.

Flamand's Edoma lost about 2.4 percent from its November 2010 launch through this February, according to investors. One misstep came last fall. Flamand started November betting that the DAX Index of German companies would rise as the European crisis eased, according to a letter sent to clients that month. The bet failed when European leaders said on Nov. 2 that Greece may have to abandon the euro. Martina Slowey, Edoma's chief operating officer, declined to comment.

Other Goldman traders who left the principal strategies unit include Daniele Benatoff, 32, and Ariel Roskis, 36. Their Benros Event Driven & Opportunistic Fund has lost about 1.7 percent in the nine months through February, according to investors. Benatoff and Roskis, who left Goldman last year, declined to comment.

ABOUT THE AUTHOR
As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced ...