November 5, 2007 The hedge fund universe is still mourning the second demise of Victor Niederhoffer, whose flagship Matador Fund reportedly lost more than 75% this year, forcing the contrarian trader to close his doors in September. Niederhoffer may be out of commission for the time being, but his disciples, including traders Toby Crabel and Paul Buethe, his brother, Roy Niederhoffer, and Peter Hansen, are all actively trading and making healthy gains in an otherwise rocky market environment. Year-to-date, the $348 million joint venture, the Buethe Crabel Diversified Futures program, which employs multiple, price-driven short-term trading strategies across a global portfolio of over 35 liquid futures and currency markets, is up 6.2%. Roy Niederhofferâs $147 million Diversified program is up 15% and Hansenâs flagship $16 million Comprehensive program is up 10.4%. âPart of the advantage the Niederhoffer alumni have is that short-term systematic traders tend to be less correlated with each other than long-term traders, for the simple reason that there are more things you can do in the short term,â said Hansen, who worked with Niederhoffer in the early 1990s as a trader. Hansen credits Niederhofferâs out-of-the-box trading style for his current success. âEven though he was not a systematic trader, he was using stats in a way that was not being done by other systematic traders,â said Hansen. âThe statistical depth that we had just blew other traders away in the 1980âs and into the early 1990âs.â Hansen called working alongside the famed trader a great experience, though he left the firm because he had âcertain inclinationsâ that were different from the masterâs. âI wanted to have a rough balance of momentum and reversal trades, and he was always skeptical of any sort of momentum approach,â he said. âI also wanted to have a real systematic program and Victor was someone who crunches a lot of numbers but didnât really trade systematically. I wanted to trade according to certain rules so I could spend my time researching and refining those rules, rather than having to decide how to trade the markets each day.â Hansen also noted that recent news about Niederhofferâs blowup âunderlines that it was not the best place to learn about risk management, which was something I had to learn elsewhere.â Investing with one of Neiderhofferâs protégés may just be the closest one will get to investing with the legend himself. In an interview with FINalternatives early this year, months before the market troubles sank his latest fund, Niederhoffer explained that he enjoyed a second chance after his fund collapsed in 1997. But he cautioned that âthere are no third chances,â and that, in the event, he would give up trading other peopleâs money. http://www.finalternatives.com/node/2826
Thanks for the article. very nice!! Niederhoffer has had profound impact on many highly succesful fund managers. he remains one of the greatest who have EVER played this game. best wishes, surf
i think it makes way more sense to judge someone by the results of those mentored and trained by that person than the person's most recent situation. regards, surf