ago when he would have begged, beaten, and killed for half that amount. “As I said, Septimus, we’re not taking any more investors in that particular fund. It’s nothing personal. There’s no way I can add to my position for the time being. It’s more administrative than anything else. I’d be happy to revisit the issue in a few months.”
Astor’s excuse was not entirely truthful. In fact the reason was personal. Reventlow’s was a little different from other family offices. The source of his money was always a bit hazy. Reventlow claimed it hailed from a German industrial dynasty dating to the era of Bismarck and the first kaiser. Astor knew about the Krupps, the Thyssens, and the German branch of the Rothschilds, but he’d never heard of a Reventlow, except for an obscure count who’d married Barbara Hutton, the heiress to the Woolworth fortune. And of course there was the question of the man’s looks. It was not that he didn’t look German so much as that he didn’t look anything. He was some kind of strange Eurasian mongrel.
In the end, Astor couldn’t really care less where the money came from. It was Reventlow’s reputation as an investor who expected quick returns and who pulled his money if he didn’t get them that bothered him. The hedge fund business had a term for people like Septimus Reventlow:
hot money.
It was not a compliment.
“We’re set on investing now,” said Reventlow. “We sold some of our interests in the Far East and enjoyed a rather significant financial event. We don’t like our capital to lie fallow.”
And that was the problem with hot money, thought Astor. It was always chasing the highest returns, moving in and out of funds like some horny teenager rushing from bar to bar chatting up the girl with the blondest hair and the biggest boobs. If he got lucky in ten minutes, he stayed. If not, he moved on to the next one.
One stellar quarter did not a track record make.
Hedge fund managers liked continuity. They sought to build assets quarter after quarter, year after year. They preferred clients who shared their investment philosophy and were with them for the long term (barring a nuclear meltdown or the equivalent, say a loss of 10 percent or more in any one year). Reventlow was as rich as a Rockefeller, but he invested like a riverboat gambler.
“Look,” said Astor. “I understand your not wanting your money to sit around earning money market rates. I’m sure we can find an arrangement. All of my other funds would welcome your investment. I can get our managers in here in two minutes. I think it would be worth your time to hear what they have to say.”
“The Astor fund,” said Reventlow, as if stating a decree. “And yes, I’m sure we can find an arrangement.”
Astor smiled, if only to keep from punching Reventlow in the teeth. There was a method to his madness. Increasing his position in the yuan was not simply a matter of calling up his broker and buying another ten or twenty thousand contracts. Comstock Astor currently held $3 billion in its coffers, give or take. Of that, Astor had a billion down against the yuan, or had shorted it, meaning that he was betting it would depreciate in value versus the dollar.
Here’s how the math worked. To speculate on currency, you bought contracts that stipulated what that currency might be worth thirty, sixty, or ninety days in the future. One contract controlled $1,000 worth of the currency. Astor had purchased 200,000 contracts, giving him control of $20 billion worth of the currency, or around 126 billion yuan. But Astor didn’t have to put down the entire $20 billion. According to the margin requirements as set forth by the Chicago Board Options Exchange (CBOE), the organization that looked after currency trading, he needed to deposit only 10 percent of the contracts’ value, in this case $2 billion. Astor put in a billion himself. He borrowed the other billion from banks that specialized in this kind of thing,
Astor’s excuse was not entirely truthful. In fact the reason was personal. Reventlow’s was a little different from other family offices. The source of his money was always a bit hazy. Reventlow claimed it hailed from a German industrial dynasty dating to the era of Bismarck and the first kaiser. Astor knew about the Krupps, the Thyssens, and the German branch of the Rothschilds, but he’d never heard of a Reventlow, except for an obscure count who’d married Barbara Hutton, the heiress to the Woolworth fortune. And of course there was the question of the man’s looks. It was not that he didn’t look German so much as that he didn’t look anything. He was some kind of strange Eurasian mongrel.
In the end, Astor couldn’t really care less where the money came from. It was Reventlow’s reputation as an investor who expected quick returns and who pulled his money if he didn’t get them that bothered him. The hedge fund business had a term for people like Septimus Reventlow:
hot money.
It was not a compliment.
“We’re set on investing now,” said Reventlow. “We sold some of our interests in the Far East and enjoyed a rather significant financial event. We don’t like our capital to lie fallow.”
And that was the problem with hot money, thought Astor. It was always chasing the highest returns, moving in and out of funds like some horny teenager rushing from bar to bar chatting up the girl with the blondest hair and the biggest boobs. If he got lucky in ten minutes, he stayed. If not, he moved on to the next one.
One stellar quarter did not a track record make.
Hedge fund managers liked continuity. They sought to build assets quarter after quarter, year after year. They preferred clients who shared their investment philosophy and were with them for the long term (barring a nuclear meltdown or the equivalent, say a loss of 10 percent or more in any one year). Reventlow was as rich as a Rockefeller, but he invested like a riverboat gambler.
“Look,” said Astor. “I understand your not wanting your money to sit around earning money market rates. I’m sure we can find an arrangement. All of my other funds would welcome your investment. I can get our managers in here in two minutes. I think it would be worth your time to hear what they have to say.”
“The Astor fund,” said Reventlow, as if stating a decree. “And yes, I’m sure we can find an arrangement.”
Astor smiled, if only to keep from punching Reventlow in the teeth. There was a method to his madness. Increasing his position in the yuan was not simply a matter of calling up his broker and buying another ten or twenty thousand contracts. Comstock Astor currently held $3 billion in its coffers, give or take. Of that, Astor had a billion down against the yuan, or had shorted it, meaning that he was betting it would depreciate in value versus the dollar.
Here’s how the math worked. To speculate on currency, you bought contracts that stipulated what that currency might be worth thirty, sixty, or ninety days in the future. One contract controlled $1,000 worth of the currency. Astor had purchased 200,000 contracts, giving him control of $20 billion worth of the currency, or around 126 billion yuan. But Astor didn’t have to put down the entire $20 billion. According to the margin requirements as set forth by the Chicago Board Options Exchange (CBOE), the organization that looked after currency trading, he needed to deposit only 10 percent of the contracts’ value, in this case $2 billion. Astor put in a billion himself. He borrowed the other billion from banks that specialized in this kind of thing,
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